1. Segmentation, Targeting,and PositioningBuilding the Right Relationships with the Right Customers Chapter 7

2. Learning Goals1. Learn the three steps of target marketing, market segmentation, target marketing, and market positioning2. Understand the major bases for segmenting consumer and business marketing strategy3. Know how companies identify attractive market segments and choose target marketing strategy4. Realize how companies position their products for maximum competitive advantage in the marketplace 7-1 3. Case StudyProcter & Gamble Sells multiple brands Has also identifiedwithin the same product different niches withincategory for a variety of certain segmentsproducts Product modificationsare useful: Tide offers Brands feature aseven different productdifferent mix of benefits formulations to serveand appeal to different different niches needssegments7-2 4. Steps in market segmentation, targeting andpositioningMarket Segmentation Identify bases for segmenting the market Develop segment profilesTarget Marketing Develop measure of segmentattractiveness Select target segmentsMarket Positioning Develop positioning for target segments Develop a marketing mix for each segment7-3Goal 1: Learn the three steps of target marketing 5. DefinitionMarket Segmentation: Dividing a market into distinctgroups with distinctneeds, characteristics, or behaviorwho might require separateproducts or marketing mixes.7-4Goal 2: Understand the major bases for segmentation 6. Segmenting ConsumerMarketsGeographical segmentationDemographic segmentation Most popular segmentationPsychographic segmentation Lifestyle, social class, andpersonality-based segmentationBehavioral segmentation7-5Goal 2: Understand the major bases for segmentation 7. Geographic SegmentationVariables World region Neighborhoodor country City or U.S. region metro size State Density City Climate 7-6 Goal 2: Understand the major bases for segmentation 8. Demographic SegmentationVariables Age Occupation Gender Education Family size Religion Family life cycle Race Income Generation Nationality 7-7 Goal 2: Understand the major bases for segmentation 9. Behavioral Segmentation Variables Occasions User Rates Benefits Loyalty Status User Status Readiness Stage Attitude Towardthe Product 7-8 Goal 2: Understand the major bases for segmentation 10. Segmenting Business MarketsDemographic segmentation Industry, company size, locationOperating variables Technology, usage status, customer capabilitiesPurchasing approachesSituational factors Urgency, specific application, size of orderPersonal characteristics Buyer-seller similarity, attitudes toward risk, loyalty 7-9Goal 2: Understand the major bases for segmentation 11. Segmenting International MarketsGeographic segmentation Location or regionEconomic factors Population income or level of economic developmentPolitical and legal factors Type / stability of government, monetary regulations, amount of bureaucracy, etc.Cultural factors Language, religion, values, attitudes, customs, beha vioral patterns7 - 10Goal 2: Understand the major bases for segmentation 12. Requirements for EffectiveSegmentationMeasurable Size, purchasing power, and profile of segmentAccessible Can be reached and servedSubstantial Large and profitable enough to serveDifferentiable Respond differentlyActionable Effective programs can be developed7 - 11Goal 2: Understand the major bases for segmentation 13. Target Marketing Target Market Consists of a set of buyers who share common needs or characteristics that the company decides to serve 7 - 12Goal 3: Know how companies identify and target attractive segments 14. Target Marketing Evaluating Market Segments Segment size and growth Segment structural attractiveness Level of competition Substitute products Power of buyers Powerful suppliers Company objectives and resources 7 - 13Goal 3: Know how companies identify and target attractive segments 15. Target Marketing Selecting Target Market Segments Undifferentiated (mass) marketing Differentiated (segmented) marketing Concentrated (niche) marketing Micromarketing (local or individual) 7 - 14Goal 3: Know how companies identify and target attractive segments 16. Choosing a TargetMarketing Strategy Considerations include: Company resources The degree of product variability Products life-cycle stage Market variability Competitors marketing strategies 7 - 15Goal 3: Know how companies identify and target attractive segments 17. Target Marketing Socially Responsible Targeting Some segments, especially children, are at special risk Many potential abuses on the Internet, including fraud Internet shoppers Controversy occurs when the methods used are questionable 7 - 16Goal 3: Know how companies identify and target attractive segments 18. PositioningPositioning: The place the product occupies inconsumers minds relative to competingproducts. Typically defined by consumers on thebasis of important attributes. Involves implanting the brands uniquebenefits and differentiation in thecustomers mind. Positioning maps that plot perceptions ofbrands are commonly used. 7 - 17 Goal 4: Realize how companies position their products 19. Choosing a PositioningStrategy TopicsDifferentiation can be based onIdentifying possible Products Servicescompetitive advantages ChannelsChoosing the right People Imagecompetitive advantageChoosing a positioningstrategy 7 - 18 Goal 4: Realize how companies position their products 20. Market Segmentation Topics How many differences topromote? Unique sellingIdentifying possible propositioncompetitive advantages Several benefitsChoosing the right Which differences tocompetitive advantage promote? Criteria include:Choosing a positioning Importantstrategy Distinctive Superior Communicable Preemptive Affordable Profitable 7 - 19Goal 4: Realize how companies position their products 21. Market Segmentation Topics Value propositions represent the fullIdentifying possible positioning of the brandcompetitive advantages Possible value propositions:Choosing the right More for Morecompetitive advantage More for the SameChoosing a positioning More for Lessstrategy The Same for Less Less for Much Less 7 - 20 Goal 4: Realize how companies position their products 22. Developing aPositioning StatementPositioning statements summarizethe company or brand positioning EXAMPLE: To (target segment andneed) our (brand) is (concept) that(point-of-difference)7 - 21Goal 4: Realize how companies position their products 23. Communicating thePositioningCompanies must be certain toDELIVER their value propositions.Positions must be monitored andadapted over time.7 - 22Goal 4: Realize how companies position their products