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UNIVERSITY OF GUYANA MARKETING 1101…..SEGMENTATION
MODULE 5
ERIC M. PHILLIPS (MBA,
CTP, BSc. Eng.)
SEPT-DECEMBER 2013
MARKETING MANAGEMENT 1101 OVERVIEW
COURSE OUTLINE AND APPROACH
ABSTRACT THINKING, THE PHILLIPS VISION MAP AND THE MARKETING ALPHABET
MARKETING AND MARKETS
CONSUMER BEHAVIOR
MARKETING MIX (4 Ps / 7 Ps)
MARKETING MANAGEMENT (5 APPROACHES)
MARKETING RESEARCH
SWOT/PEST / 5 FORCES ANALYSES
SEGMENTATION, TARGETING, POSITIONING
PRODUCT, BRAND,PRODUCT LIFE CYCLE, PRODUCT MANAGEMENT
PRICING
PROMOTIONS (ADVERTISING)
PLACE (DISTRIBUTION CHANNELS)
BOSTON CONSULTING GROUP MATRIX, PRODUCT PORTFOLIO
PORTER’S 3 GENERIC STRATEGIES AND STRATEGIC MARKET PLANNING
ANSOFF MATRIX
INTERNATIONAL MARKETING MANAGEMENT
I AM THE PERFECT PRODUCT (INDIVIDUAL ASSIGNMENT…MARKETING PRINCIPLES)
GROUP PROJECT (A MARKETING PLAN FROM A COMPANY)
MARKETING & YOU
Marketing is an exciting subject.
A Way of Life.
We humans are walking, talking Marketers.
ADVERTISING……THE SEVEN DEADLY SINS
LUST- Excessive sexual desire
GLUTTONY- over consumption of anything
GREED- Excess acquisition of wealth
SLOTH- Sadness
WRATH- uncontrolled feelings of hatred and anger
PRIDE- excessive love of self
ENVY- Resentful
OVERARCHING DEFINITION
PHILIP KOTLER and GARY ARMSTRONG……………..PRINCIPLES OF MARKETING (14TH EDITION)
MARKETING IS
“CREATING AND CAPTURING CUSTOMER VALUE”
“MANAGING PROFITABLE CUSTOMER
RELATIONSHIPS”
TYPES OF MARKETING?
You see a gorgeous girl at a party. You go up to her and say: "I am very rich.
Marry me! " - That’s DIRECT MARKETING“
You’re at a party with a bunch of friends and see a gorgeous girl. One of your
friends goes up to her and pointing at you says: " He’s very rich. "Marry him." -
That’s ADVERTISING“
You see a gorgeous girl at a party. You go up to her and get her telephone
number. The next day, you call and say: " Hi, I’m very rich. "Marry me - That’s
TELEMARKETING"
7
We are going global
Political/legal forces
Economic forces
1
2
Environmental uncontrollables country market A
Environmental uncontrollables country market B
Environmental uncontrollables country market C
Competitive structure Competitive
Forces
Level of Technology
Price Product
Promotion Channels of
distribution
Geography and
Infrastructure
Foreign environment (uncontrollable)
Structure of distribution
Economic climate
Cultural forces
3
4 5
6
7 Political/
legal forces
Domestic environment (uncontrollable)
(controllable)
LIFE LESSON ?
GOD, GRANT ME THE SERENITY TO ACCEPT
THE PEOPLE I CANNOT
CHANGE;
THE COURAGE TO CHANGE THE ONE I CAN;
AND THE WISDOM TO
KNOW THAT PERSON IS ME.
PRODUCT LIFE CYCLES AND THE
BOSTON MATRIX Sales/Profits
Time
PLC and Profits
PLC
Losses
Break Even
Profits
Developing Growth Strategies
Existing New
products products
Existing
markets
New
markets
Market
Penetration
Market
Development Diversification
Product
Development
5 THINGS PEOPLE REGRET THE MOST NEAR DEATH
I WISH I’D HAD THE COURAGE TO LIVE A LIFE TRUE TO MYSELF, NOT THE LIFE OTHERS EXPECTED
OF ME.
I WISH I HADN’T WORKED SO HARD.
I WISH I’D HAD THE COURAGE TO EXPRESS MY FEELINGS
I WISH I HAD STAYED IN TOUCH WITH MY FRIENDS.
I WISH THAT I HAD LET MYSELF BE HAPPIER.
GOALS OF THE MODULE
1. LEARN THE 3 STEPS OF TARGET MARKETING; MARKET SEGMENTATION; TARGET MARKETING AND MARKET POSITIONING
2. UNDERSTAND THE MAJOR BASES FOR SEGMENTING
3. KNOW HOW COMPANIES IDENTIFY ATTRACTIVE MARKET SEGMENTS AND CHOOSE TARGET MARKETING STRATEGY
4. REALIZE HOW COMPANIES POSITION THEIR PRODUCTS FOR MAXIMUM COMPETITIVE ADVANTAGE IN THE MARKETPLACE
THE 3 STEPS IN MARKET SEGMENTATION, TARGETING, AND POSITIONING
1. Identify
segmentation
variables and
segment the
market
2. Develop
profiles of
resulting
segments
Market Segmentation
3. Evaluate
attractiveness
of each
segment
4. Select the
target
segment(s)
Market Targeting
5. Identify possible
positioning concepts for each target
segment
6. Select, develop, and communicate
the chosen positioning
concept
Market Positioning
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STEPS IN MARKET SEGMENTATION, TARGETING, AND POSITIONING
1.Identify bases for segmenting
the market
2. Develop profiles of
resulting segments
3. Develop measures of
Segment attractiveness
4. Select the target
segments
5. Develop positioning for each
Target segment
6. Develop marketing mix
for each target segment
Market Segmentation
Market Targeting
Market Positioning
MARKET SEGMENTATION
MARKET SEGMENTATION IS THE PROCESS
THAT COMPANIES USE TO DIVIDE LARGE,
HETEROGENEOUS MARKETS INTO SMALL
MARKETS THAT CAN BE REACHED MORE
EFFICIENTLY AND EFFECTIVELY WITH
PRODUCTS AND SERVICES THAT MATCH
THEIR UNIQUE NEEDS
MARKET SEGMENTATION
1. THE ANALYTICAL DIVISION OF THE MARKET INTO DISCRETE GROUPS
OF CUSTOMERS THAT SHARE COMMON ATTRIBUTES.
2. THE IDENTIFICATION OF SUBSETS OF BUYERS WITHIN A MARKET WHO
SHARE SIMILARITIES, NEEDS AND WHO HAVE SIMILAR BUYING
PROCESSES.
MARKET SEGMENT
1. A subgroup within the market who share certain relevant characteristics
2. A group of customers with certain characteristics in common & whose needs
can be met with a distinct marketing mix
3. Three basic questions
• Who is buying?
• What do they buy?
• When do they buy?
• 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
WHY MARKET SEGMENTATION?
Procter & Gamble
FIRMS ENGAGE IN SEGMENTATION TO….
Develop different strategies for different parts of the market
Increase sales & profit from each segment
Identify marketing opportunities
Dominate certain niche segments
Reflect differences in customer tastes
Prioritize on those segments most likely to provide a higher
return
EVALUATION OF SEGMENTS
EVALUATING MARKET SEGMENTS
segment size & growth
segment’s structural analysis
competition within the segment
existing or potential substitute products
relative power of buyers / suppliers
company’s objectives & resources
environment, social responsibility, if it is core business,
can employ skills & resources superior to those of
competition
THERE ARE DIFFERENT TYPES OF MARKETS
TO SEGMENT
SEGMENTING CONSUMER MARKETS
SEGMENTING BUSINESS MARKETS
SEGMENTING INTERNATIONAL MARKETS
MARKET SEGMENTATION
Geographic segmentation
Demographic segmentation
Psychographic segmentation
Behavioral segmentation
Segmenting Consumer Markets
BASES FOR SEGMENTING CONSUMER MARKETS
Occasions, Benefits, Uses, or Attitudes
Behavioral
Geographic
Region, City or Metro Size, Density, Climate,
Nations, counties, villages
Demographic
Age, Gender, Family size , Life cycle, Race, Occupation, Income , Religion, Education, Nationality.
Lifestyle or Personality
Psychographic
MARKET SEGMENTATION
Demographic segmentation divides
the market into groups based on
variables such as age, gender,
family size, family life cycle,
income, occupation, education,
religion, race, generation, and
nationality
Segmenting Consumer Markets
GEOGRAPHIC SEGMENTATION?
IS GEOGRAPHICAL CLIMATE A
LEGITIMATE MEANS OF
SEGMENTATION FOR MANY
PRODUCTS OR SERVICES?
NAME SEVERAL EXAMPLES OF
PRODUCTS FOR WHICH NEED (AND
DEMAND) WOULD VARY ON A
GEOGRAPHICAL BASIS.
Age and life-cycle stage segmentation is the process of offering different products
or using different marketing approaches for different age and life-cycle groups.
Gender segmentation divides the market based on sex (male or female)
CONSUMER MARKET SEGMENTATION
Income segmentation divides the market into affluent or low-income consumers
Psychographic segmentation divides buyers into different groups based on
social class, lifestyle, or personality traits
CONSUMER MARKET SEGMENTATION
CONSUMER MARKET SEGMENTATION
Behavioral segmentation divides buyers into groups based on their
knowledge, attitudes, uses, or responses to a product
Occasions
Benefits sought
User status
Usage rate
Loyalty status
SOPHISTICATED CONSUMER MARKET SEGMENTATION
Multiple segmentation is used to identify smaller, better-
defined target groups.
Geo-demographic segmentation is an example of
multivariable segmentation that divides groups into
consumer lifestyle patterns
MARKET SEGMENTATION
PRIZM NE classifies every American household
into 66 unique segments organized into 14
different social groups.
These groups segment people and locations into
marketable groups of like-minded consumers that
exhibit unique characteristics and buying behavior
based on a host of demographic factors
Using Multiple Segmentation Bases
MARKET SEGMENTATION
Geographic location
Economic factors
Political-legal factors
Cultural factors
Segmenting International markets
Market Segmentation
Inter-market segmentation divides consumers into
groups with similar needs and buying behaviors
even though they are located in different countries
Segmenting Business Markets
MARKET SEGMENTATION
To be useful, market segments must be:
Requirements for Effective Segmentation
Measurable Accessible
Substantial Differentiable
Actionable
Measurable
Accessible
Substantial
Differential
• Segments must be large or profitable enough to serve.
• Segments can be effectively reached and served.
Actionable
• Size, purchasing power, profiles of segments can be measured.
• Segments must respond differently to different
marketing mix elements & actions.
• Must be able to attract and serve the segments.
Effective Segmentation
HEAVY AND LIGHT USERS OF COMMON CONSUMER PRODUCTS
HEAVY HALF LIGHT HALF PRODUCT (% USERS)
75%
71%
Soups and detergents (94%) 25%
29%
79% 21%
Toilet tissue (95%)
Shampoo (94%)
75% 25%
17%
17%
Paper towels (90%)
Cake mix (74%)
Cola (67%)
83%
83%
13%
5%
87%
19%
Beer (41%)
Dog food (30%)
Bourbon (20%)
81%
95%
Selecting Target Market Segments
Target market consists of a set of buyers who
share common needs or characteristics
that the company decides to serve.
TARGET MARKETING Valuating Market Segments
SEGMENT SIZE AND GROWTH
SEGMENT STRUCTURAL ATTRACTIVENESS
COMPANY OBJECTIVES AND RESOURCES
TARGET MARKETING
STRATEGIES STRATEGY # 1 DIFFERENTIATED MARKETING
Differentiated marketing targets several different market
segments and designs separate offers for each
Goal is to achieve higher sales and stronger position
More expensive than undifferentiated marketing
DIFFERENTIATION STRATEGY
Multi segment approach
Separate mix for each segment
Expensive In terms of product & marketing
cost
Only possible for large firms
STRATEGY # 2 CONCENTRATED MARKETING
Concentrated marketing targets a small share of a
large market
Limited company resources
Knowledge of the market
More effective and efficient
CONCENTRATED MARKETING
Marketing effort directed at a single highly
defined segment
Niche marketing – Rolex watches
Used when one group is especially attractive for the organization to
target
A useful strategy for smaller firms – avoids a head on collision with
major players
Provides scope for competitive advantage in a small niche in the market
STRATEGY # 3 MICRO-MARKETING
Micromarketing is the practice of tailoring products and marketing
programs to suit the tastes of specific individuals and locations
Local marketing
Individual marketing
STRATEGY # 4 LOCAL MARKETING
Local marketing involves tailoring brands and promotion to the needs
and wants of local customer groups
CITIES
NEIGHBORHOODS
STORES
STRATEGY # 5 INDIVIDUAL MARKETING
Individual marketing involves tailoring products and marketing
programs to the needs and preferences of individual customers
Also known as:
– One-to-one marketing
– Mass customization
– Markets-of-one marketing
Identifying possible
competitive advantages
Choosing the right
competitive advantage
Choosing a positioning
strategy
Differentiation can be based on
– Products
– Services
– Channels
– People
– Image
CHOOSING A POSITIONING STRATEGY
MARKET SEGMENTATION
• How many differences to promote?
– Unique selling proposition
– Several benefits
• Which differences to promote?
Criteria include:
– Important
– Distinctive
– Superior
– Communicable
– Preemptive
– Affordable
– Profitable
Identifying possible competitive
advantages
Choosing the right competitive
advantage
Choosing a positioning strategy
MARKET SEGMENTATION
• Value propositions represent the full
positioning of the brand
• Possible value propositions:
– More for More
– More for the Same
– More for Less
– The Same for Less
– Less for Much Less
Identifying possible competitive
advantages
Choosing the right competitive
advantage
Choosing a positioning strategy
CONTINUUM OF TARGETING STRATEGIES
Customized Different mix for each customer
Niche Targets a single small segment
Concentrated Targets single large segment
Differentiated Different mix for each segment
Undifferentiated Single marketing mix for all customers
MARKET TARGETING
Company resources
Product variability
Product life-cycle stage
Market variability
Competitor’s marketing strategies
Choosing a Targeting Strategy depends on
MARKET TARGETING
Benefits customers with specific need
Concern for vulnerable segments
Children
– Alcohol
– Cigarettes
– Internet abuses
Socially Responsible Target Marketing
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MARKET SEGMENTATION
Levels Of Marketing Segmentation
Segment
marketing Niche Marketing Micro-marketing Mass Marketing
No Segmentation Complete
segmentation
FIVE PATTERNS OF TARGET MARKET SELECTION
Single-segment concentration
Product specialization
M1 M2 M3
P1
P2
P3
Selective specialization M1 M2 M3
P1
P2
P3
M1 M2 M3
Full market coverage
P1
P2
P3
Market specialization
M1 M2 M3
P1
P2
P3
P1
P2
P3
M1 M2 M3
P = Product M = Market
SEGMENT-BY-SEGMENT INVASION PLAN
CUSTOMER GROUPS
Truckers Railroads Airlines
Large computers
Pro
du
ct V
arie
ties
Personal computers
Mid-size computers
Company B Company C Company A
POSITIONING
Position in the market
• The location of a product or service alongside key competitors in the
mind of consumers
• Refers to the place the product occupies in the consumer’s perceptual map
of the market
POSITION AND POSITIONING
•A product’s position ultimately depends on the attitudes of people
in the target market
• Firms will seek to position their products to increase
sales
• Either marketers accept the customer attitudes as they & tailor the
product to fit those attitudes or seek to change those attitudes
• Positioning indicates how a company wishes to compete in the
market place
POSITIONING
Positioning
Arranging for a brand or product to occupy a clear
and distinctive place in the minds of the target
customers relative to competing products and brands
THE ROLE OF POSITIONING
The role of positioning…
• To strengthen the power of messages directed at consumers
• To target a particular segment
• To ensure that the product is differentiated in the minds of the
consumer
• To decide on the ground on which to compete
• To analyze re-positioning possibilities
THE ROLE OF POSITIONING
The role of positioning…
To strengthen the power of messages directed at consumers
To target a particular segment
To ensure that the product is differentiated in the minds of the
consumer
To decide on the ground on which to compete
To analyze re-positioning possibilities
PORTER’S GENERIC STRATEGIES
Porter’s generic strategies
• Cost leader: Compete by being the lowest cost producer
• Differentiation: Compete by offering something different & superior
• Focus: Become a niche player concentrating on small part of the
market
DIFFERENTIATION
The basic principle is that you must either:
- Differentiate your product
- Be a provider of generic products to be sold at the
lowest prices
DIFFERENTIATION AND POSITIONING
Product position is the way the product
is defined by consumers on important
attributes—the place the product occupies
in consumers’ minds relative to
competing products
– Perceptions
– Impressions
– Feelings
DIFFERENTIATION AND POSITIONING
Competitive advantage is an advantage over
competitors gained by offering consumers greater
value, either through lower prices or by providing
more benefits that justify higher prices
Identifying Possible Value Differences and
Competitive Advantages
DIFFERENTIATION AND POSITIONING
Identifying a set of possible competitive
advantages to build a position by
providing superior value from:
Choosing a Differentiation and Positioning Strategy
Product differentiation
Service differentiation
Channel differentiation
People differentiation
Image differentiation
DIFFERENTIATION AND POSITIONING
Difference to promote should be:
Choosing the Right Competitive Advantage
Important Distinctive Superior
Communicable Preemptive Affordable
Profitable
DIFFERENTIATION AND POSITIONING
Value proposition
is the full mix of
benefits upon
which a brand is
positioned
Selecting an Overall Positioning Strategy
PERCEPTUAL MAP
• The visual representation of a brand within a specific
market place showing its position relative to
competitors
• Shows which and how products compete in
consumers mind and suggests how an product can be
positioned to maximize sales
DIFFERENTIATION AND POSITIONING
Positioning maps
show consumer
perceptions of
their brands
versus competing
products on
important buying
dimensions
WHAT TYPE OF PRODUCT AM I?
•Customer service
•Trained Tour Guide
•Professionalism
•Family circle
•corporate network
• volunteer organisation
•humanaterian,
•skilled professional,
•degree in tourism
•Self Motivated
•Passionate
•very expensive and of high value based on knowledge, skills and experience
Price Product
Promotion Place
COMMUNICATION AND DELIVERING THE
CHOSEN POSITION
Choosing the
positioning
is often easier than
implementing the
position.