GLOBAL GLOBAL MARKETINGMARKETING

Marketing SegmentationMarketing Segmentation

Market AttractivenessMarket Attractiveness

PositioningPositioning

What is Market What is Market Segmentation?Segmentation?

Process of dividing a potential Process of dividing a potential market into distinct subsets of market into distinct subsets of consumers with common needs or consumers with common needs or characteristics.characteristics.

Separating a heterogeneous market Separating a heterogeneous market into smaller homogeneous units.into smaller homogeneous units.

Important Elements of Important Elements of Market SegmentationMarket Segmentation

Each market segment has unique Each market segment has unique needs and wants and will have a needs and wants and will have a unique demand curve.unique demand curve.

Each market segment requires its Each market segment requires its own marketing strategy and own marketing strategy and marketing plan.marketing plan.

Market segmentation produces Market segmentation produces increased costs to the firm in the increased costs to the firm in the short run.short run.

Increased costs are generally offset Increased costs are generally offset by increasing sales in the long run.by increasing sales in the long run.

The Segmentation The Segmentation ProcessProcess

Needs-BasedSegmentation

The Segmentation The Segmentation ProcessProcess

Needs-BasedSegmentation

SegmentIdentification

Segmentation BasesSegmentation Bases

GeographicGeographic CountryCountry RegionRegion County sizeCounty size SMSA populationSMSA population DensityDensity

DemographicDemographic AgeAge SexSex IncomeIncome EducationEducation OccupationOccupation RaceRace Family life cycleFamily life cycle

Segmentation BasesSegmentation Bases

PsychographicPsychographic Social classSocial class PersonalityPersonality LifestyleLifestyle Activities, interests, Activities, interests,

& opinions (AIO’s)& opinions (AIO’s)

BehavioralisticBehavioralistic Decision unitDecision unit Usage rateUsage rate ReadinessReadiness Benefits soughtBenefits sought OccasionOccasion Brand loyaltyBrand loyalty

Global SegmentationGlobal Segmentation Global ScanGlobal Scan

StriversStrivers Median age of 31; hectic lives. Driven to achieve success. Materialistic

pleasure seekers; time & money in short supply. Achievers

Older than strivers; affluent; assertive. Upwardly mobile, having already attained success. Status-conscious, value quality.

Pressured Women of all ages; financial and family pressures; overwhelming life

problems Adapters

Older people; content with their lives. Maintain values while keeping an open mind about change.

Traditionals Rooted to the past; clings to cultural heritage and values.

Euroconsumer Study (DMBB) Successful idealists

Have achieved professional & material success, but also maintain commitment to abstract or socially responsible ideals.

Affluent materialists Status-conscious up and comers; use conspicuous consumption.

Comfortable belongers Conservative, mostly comfortable with familiar.

Disaffected survivors Lack power and affluence; tend to be either resentful or

resigned. Concentrated in high crime, urban inner-city neighborhoods.

Young & Rubicam’s Cross-Cultural Young & Rubicam’s Cross-Cultural Consumer Characterizations (4Cs)Consumer Characterizations (4Cs) ConstrainedConstrained

Resigned poorResigned poor Struggling poorStruggling poor

Middle majorityMiddle majority MainstreamersMainstreamers AspirersAspirers SucceedersSucceeders

InnovatorsInnovators TransitionalsTransitionals ReformersReformers

The Segmentation The Segmentation ProcessProcess

Needs-BasedSegmentation

SegmentIdentification

SegmentAttractiveness

Market AttractivenessMarket Attractiveness

Market attractiveness represents the Market attractiveness represents the degree of market opportunity degree of market opportunity offered by a market segment and the offered by a market segment and the ability of the firm to meet the ability of the firm to meet the segment’s needs within a segment’s needs within a competitive setting.competitive setting.

Select segment(s) that offer best Select segment(s) that offer best opportunity for profits.opportunity for profits.

The Segmentation The Segmentation ProcessProcess

Needs-BasedSegmentation

SegmentIdentification

SegmentAttractiveness

Segment PositioningStrategy

PositioningPositioning Match offerings of firm to the needs and Match offerings of firm to the needs and

wants of market segments.wants of market segments.

Effective positioning involves understanding Effective positioning involves understanding customers’ perceptions about both the customers’ perceptions about both the psychological and physical characteristics psychological and physical characteristics of offerings.of offerings.

Positioning starts with a product. But Positioning starts with a product. But positioning is not what you do to a productpositioning is not what you do to a product—it’s what you do to the mind of the —it’s what you do to the mind of the customer. That is, you position the product customer. That is, you position the product in the mind of the customer.in the mind of the customer.

Positioning StrategyPositioning Strategy

Learn the customer’s viewpoint. Learn the customer’s viewpoint. Create positioning statement based Create positioning statement based on unique customer needs.on unique customer needs.

Primary Needs

Articulated Needs

Exciting Needs

Primaryneeds

Excitingneeds

Articulated needs

Positioning StatementsPositioning Statements

To communicate positioning, a To communicate positioning, a marketing plan should include a marketing plan should include a positioning statement following the positioning statement following the form:form:

““To (target group and need) our To (target group and need) our (brand) is (brand) is (concept) that (point of (concept) that (point of difference).”difference).”

Example:Example:

““To young, active soft-drink consumers To young, active soft-drink consumers who have little time for sleep, who have little time for sleep, Mountain Dew is the soft drink that Mountain Dew is the soft drink that gives you more energy than any other gives you more energy than any other brand because it has the highest level brand because it has the highest level of caffeine. With Mountain Dew, you of caffeine. With Mountain Dew, you can stay alert and keep going even can stay alert and keep going even when you haven’t been able to get a when you haven’t been able to get a good night’s sleep.”good night’s sleep.”

Points to Remember Points to Remember About Positioning:About Positioning:

Based on consumer perceptions of Based on consumer perceptions of tangible and intangible tangible and intangible characteristics of offering.characteristics of offering.

The intensity of the brand will affect The intensity of the brand will affect positioning.positioning.

Global PositioningGlobal Positioning

Product categories associated with Product categories associated with high consumer involvement and a high consumer involvement and a shared “language” shared “language” High-Tech positioningHigh-Tech positioning

Emphasis on specialized informationEmphasis on specialized information Consumers already possess or wish to Consumers already possess or wish to

acquire considerable technical informationacquire considerable technical information High-Touch positioningHigh-Touch positioning

Emphasis on product image Emphasis on product image Wealth, materialism, romanceWealth, materialism, romance

The Segmentation Process

Needs-Based Segmentation

SegmentIdentification

SegmentAttractiveness

Segment PositioningStrategy

Positioning“Acid” Test

Testing the Positioning Testing the Positioning StatementStatement

Test the positioning statement with Test the positioning statement with target consumers--what do they target consumers--what do they think, how do they react to the think, how do they react to the statement?statement?

Assess need level: the stronger the Assess need level: the stronger the need, the higher the expected need, the higher the expected customer interest.customer interest. ““Do you see this product as solving a Do you see this product as solving a

problem or filling a need for you?”problem or filling a need for you?”

Testing, continued...Testing, continued...

Communicability and believability: Communicability and believability: if the scores on these dimensions are if the scores on these dimensions are low, the positioning low, the positioning mustmust be refined be refined or revised.or revised.

““Are the benefits clear to you and Are the benefits clear to you and believable?”believable?”

Testing, continued...Testing, continued...

Perceived value: The higher the Perceived value: The higher the perceived vale, the higher the perceived vale, the higher the expected consumer interest.expected consumer interest.

““Is the price reasonable in relation to Is the price reasonable in relation to the value?”the value?”

Testing, continued...Testing, continued...

Gap level between the new product Gap level between the new product and existing products: The greater and existing products: The greater the gap, the higher the expected the gap, the higher the expected consumer interest.consumer interest.

““Do other products currently meet this Do other products currently meet this need and satisfy you?”need and satisfy you?”

The SegmentationProcess

Needs-BasedSegmentation

SegmentIdentification

SegmentAttractiveness

Segment PositioningStrategy

Positioning“Acid” Test

StrategyImplementation

Segmentation StrategiesSegmentation Strategies

Mass Marketing

MassCustomization

Multisegment StrategyMultisegment Strategy

Pursue two or more segments that Pursue two or more segments that are attractive and profitable, but not are attractive and profitable, but not the whole market.the whole market.

Sequential Segment Sequential Segment StrategyStrategy

Multisegment approach, but rather Multisegment approach, but rather than pursuing all the attractive than pursuing all the attractive segments simultaneously, pursue segments simultaneously, pursue the most attractive first; when cash the most attractive first; when cash flow from that segment is positive, flow from that segment is positive, then pursue the next most then pursue the next most attractive segment, and so on.attractive segment, and so on.

Single-Segment StrategySingle-Segment Strategy

Focus on just one attractive Focus on just one attractive segment.segment.

Niche Segment StrategyNiche Segment Strategy

Focus on a smaller group within a Focus on a smaller group within a segment.segment.

Requires a further customization of Requires a further customization of marketing strategy.marketing strategy.

Mass Customization Mass Customization StrategyStrategy

Focus on all niches within a segment Focus on all niches within a segment by customizing strategies to each by customizing strategies to each subsegment.subsegment.