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Chapter 8: Segmentation, Targeting, and Positioning: Building the Right Relationships with the Right Customers

Objectives

•Be able to define the three steps of target marketing: market segmentation, target marketing, and market positioning.

•Understand the major bases for segmenting consumer and business markets.

•Know how companies identify attractive market segments and how they choose a target marketing strategy.

•Comprehend how companies position their products for maximum competitive advantage.

Please Open The Following Figures In Different Windows and Leave Them Open:

Animated Figure 8-1 , Animated Figure 8-2 .

Case Study
Procter & Gamble
•Sells multiple brands within the same product category for a variety of products •Brands feature a different mix of benefits and appeal to different segments	•*Has also identified different niches within* certain segments •Product modifications are useful: Tide offers seven different product formulations to serve different niches’ needs**

Definition

•Market Segmentation:

§Dividing a market into distinct groups with distinct needs, characteristics, or behavior who might require separate products or marketing mixes.

Market Segmentation
Topics •Segmenting Consumer Markets •Segmenting Business Markets •Segmenting International Markets •Requirements for Effective Segmentation	•Geographical segmentation §Marketing mixes are customized geographically •Demographic segmentation §Most popular segmentation §Demographics are closely related to needs, wants and usage rates •Psychographic segmentation §Lifestyle, social class, and personality-based segmentation •Behavioral segmentation §Typically done first

Market Segmentation
Geographic Segmentation Variables
•World Region or Country •U.S. region •State •City	•Neighborhood •City or Metro Size •Density •Climate

Market Segmentation
Demographic Segmentation Variables
•Age •Gender •Family size •Family life cycle •Income	•Occupation •Education •Religion •Race •Generation
•Nationality

Market Segmentation
Behavioral Segmentation Variables
•Occasions •Benefits •User Status	•User Rates •Loyalty Status •Readiness Stage
•Attitude Toward the Product

Market Segmentation
Topics •Segmenting Consumer Markets •Segmenting Business Markets •Segmenting International Markets •Requirements for Effective Segmentation	•Demographic segmentation §Industry, company size, location •Operating variables §Technology, usage status, customer capabilities •Purchasing approaches •Situational factors §Urgency, specific application, size of order •Personal characteristics §Buyer-seller similarity, attitudes toward risk, loyalty

Market Segmentation
Topics •Segmenting Consumer Markets •Segmenting Business Markets •Segmenting International Markets •Requirements for Effective Segmentation	•Geographic segmentation §Location or region •Economic factors §Population income or level of economic development •Political and legal factors §Type / stability of government, monetary regulations, amount of bureaucracy, etc. •Cultural factors §Language, religion, values, attitudes, customs, behavioral patterns

Market Segmentation
Topics •Segmenting Consumer Markets •Segmenting Business Markets •Segmenting International Markets •Requirements for Effective Segmentation	•Measurable §Size, purchasing power, and profile of segment •Accessible §Can be reached and served •Substantial §Large and profitable enough to serve •Differentiable §Respond differently •Actionable §Effective programs can be developed

Target Marketing

•Evaluating Market Segments

§Segment size and growth
§Segment structural attractiveness
v Level of competition
v Substitute products
v Power of buyers
v Powerful suppliers

§Company objectives and resources

Target Marketing

•Target Marketing Strategies

§Undifferentiated (mass) marketing
§Differentiated (segmented) marketing
§Concentrated (niche) marketing
§Micromarketing (local or individual) marketing

Target Marketing

•Choosing a Target-Marketing Strategy Requires Consideration of:

§Company resources
§The degree of product variability
§Product’s life-cycle stage
§Market variability
§Competitors’ marketing strategies

Target Marketing

•Socially Responsible Targeting

§Some segments are at special risk:

v Children
v Inner-city minority consumers
v Internet shoppers

§Controversy occurs when the methods used are questionable.

Positioning

•Positioning:

§The place the product occupies in consumers’ minds relative to competing products.
§Typically defined by consumers on the basis of important attributes.

Positioning

•Choosing a Positioning Strategy:

§Identifying possible competitive advantages

Products, services, channels, people or image can be sources of differentiation.

§Choosing the right competitive advantage

vHow many differences to promote?
–Unique selling proposition
–Positioning errors to avoid

vWhich differences to promote?

Positioning
Criteria for Meaningful Differences
•Important •Superior •Preemptive	•Distinctive •Communicable •Affordable
•Profitable

Positioning

•Choosing a Positioning Strategy:

§Selecting an overall positioning strategy

vMore for More Value Proposition
vMore for the Same Value Proposition
vThe Same for Less Value Proposition
vLess for Much Less Value Proposition
vMore for Less Value Proposition

Positioning

•Choosing a Positioning Strategy:

§Developing a positioning statement

Positioning statements summarize the company or brand positioning
EXAMPLE: To (target segment and need) our (brand) is (concept) that (point-of-difference).

§Communicating the chosen position

Chapter 8: Segmentation, Targeting, and Positioning: Building the Right Relationships with the Right Customers

Study Guide

Concepts Check

Study Guide

Concepts Challenge

Chapter Outline

Video Case

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Chapter 8: Segmentation, Targeting, and Positioning: Building the Right Relationships with the Right Customers

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