© 2002 Pearson Education Canada Inc. 7-1 principles of MARKETING Chapter 7 Market Segmentation,...

© 2002 Pearson Education Canada Inc.

7-1

principles of MARKETING

Chapter 7Chapter 7

Market Segmentation, Targeting, and Positioning for Competitive Advantage


7-2

Chapter Objectives

• Define the three steps of target marketing

• Identify the major segmentation bases for consumer and business markets

• Explain how to identify attractive market opportunities and choose market strategies

• Explain positioning and its relationship to competitive advantage


7-3

Steps in Market Segmentation, Targeting, and Positioning

Market segmentation1. Identify bases for

segmenting the market

2. Develop profiles ofresulting segments

Market targeting3. Develop measures of

segment attractiveness

4. Select the target segment(s)

Market positioning

6. Develop marketing mixfor each target segment

5. Develop positioningfor each target segment


7-4

Market Segmentation:Levels of Market Segmentation

Mass Marketing


7-5

Levels of Market Segmentation:Mass Marketing

• Mass producing, mass distributing and mass promoting the same product in the same way to all consumers

• Largest potential market helps lower costs equalling lower prices or higher margins

• Difficult to access fragmented markets

• Problems in selecting from multiple ad media and distribution channels


7-6


Segment Marketing


7-7

Levels of Market Segmentation:Segmented Marketing

• Marketing recognizes buyers differ in needs, perceptions, and buying behaviours

• Isolate broad segments comprising a market

• Adapt offers to best match segment needs

• Market more efficiently and effectively

• More focus and less competition


7-8


Niche marketing


7-9

Levels of Market Segmentation:Niche Marketing

• Marketing that focuses on subgroups within large identifiable groups in a market

• Dividing a segment into subsegments

• Defining group with distinctive set of traits seeking special combination of benefits

• Price premium

• Few or no significant competitors

• Improves focus of limited resources


7-10


Micromarketing


7-11

Levels of Market Segmentation:Micromarketing

• Tailoring products and marketing programs to suit the tastes of specific individuals or locations

• Local marketing– Local tailoring of brands and promotions– Overcomes regional differences– “First-line customers”– Dilutes brand image and operation efficiency– Logistical problems


7-12

Levels of Market Segmentation:Micromarketing

• Individual marketing– Tailoring products and marketing programs to

the needs and preferences of individual customers

– Mass customization– Custom-made products– Self-marketing


7-13

Segmenting Consumer Markets:Geographic Segmentation

• Divide market into separate geographic units

• Nations, regions provinces, cities, etc.

• Develop regional marketing programs


7-14

Segmenting Consumer Markets:Demographic Segmentation

• Most popular method• Consumer patterns

often follow their demographics

• Easier to measure than most segmentation variables

• Needed for market size and access


7-15

Segmenting Consumer Markets:Demographic Segmentation

• Age and life-cycle stage– Wants and needs vary with stage– Guard against stereotypes

• Gender– Buying patterns frequently follow gender

• Income– Affluent to restricted incomes


7-16

Segmenting Consumer Markets:Psychographic Segmentation

• Lifestyle– Reflected in purchases

• Personality– Express who they are


7-17

Segmenting Consumer Markets:Behavioural Segmentation

• Divide market into groups based on consumer knowledge, attitude, use, or response to a product

• Occasions– By occasions when buyers get the idea to buy,

actually make the purchase, or use the item

• Benefits sought– Major benefits, people seeking, brands deliver


7-18

Segmenting Consumer Markets:Behavioural Segmentation

• User status– Non-, ex-, potential, first-time, regular

• Usage rate – Light - medium - heavy– Heavy users may dominate total market

• Loyalty status– Toward brand, store, and/or company– Frequent buyers may not be loyal

• habit, indifference, low price, product unavailability


7-19

Segmenting Consumer Markets:Multiple Segmentation Bases

• Multiple bases used to better identify segments

• Geodemographic segmentation


7-20

Segmenting Business Markets

• Business demographics• Operating characteristics• Purchasing approaches• Situational factors• Personal characteristics• Plus consumer market

variables


7-21

Segmenting Business Markets:Major Segmentation Variables

Business Demographics

Industry

Company Size

Location

Personal Characteristics

Buyer-seller similarity

Risk attitude

Loyalty

Situational Factors

Urgency

Specific application

Size of order

Purchasing Approaches

Purchasing function

organization

Power structure

Existing relationship nature

General purchase policies

Purchasing criteria

Operating Variables

Technology

User/non-user Status

Customer capabilities


7-22

Segmenting International Markets

• Geographic location• Economic factors• Political and legal• Cultural factors• Intermarket (global)

segmentation– common needs and

buying behaviour


7-23

Requirements for Effective Segmentation

Measurability Accessibility

Substantiality Actionability


7-24

Market Targeting:Evaluating Market Segments

• Segment size and growth

• Segment structural attractiveness

• Company objectives and resources


7-25

Selecting Market Segments

Company marketing mix Market

A. Undifferentiated marketingA. Undifferentiated marketing

Company marketing mix 1



Segment 1

Segment 3

Segment 2

B. Differentiated marketingB. Differentiated marketing

Segment 1

Segment 3

Segment 2Company marketing mix

C. Concentrated marketingC. Concentrated marketing


7-26

Positioning Competitively:Product Positioning

• Defined by consumers on important attributes

• Place product occupies in mind relative to competing products

• Information overload• Simplify evaluation• Position happens -

planned or not


7-27

Positioning Competitively:Positioning Strategies

• Product attributes• Benefits offered• Usage occasions• Classes of users• Directly against or away

from competitor• Different product class


7-28

Positioning Strategy:Choosing and Implementing

Communicate anddeliver chosen position

Communicate anddeliver chosen position

Select the rightcompetitive advantage

Select the rightcompetitive advantage

Identify possiblecompetitive advantage

Identify possiblecompetitive advantage


7-29

Positioning Strategy:Possible Competitive Advantages• Product differentiation

• Service differentiation

• Personnel differentiation

• Image differentation


7-30

Positioning Strategy:Selecting Competitive Advantage• How many differences to promote?

– Overpositioning, underpositioning, confused positioning

• Which differences to promote?– Important, distinctive, superior, communicable,

pre-emptive, affordable, profitable


7-31

Positioning Strategy:Selecting Overall Strategy

More

The Same

Less

Ben

efit

sB

enef

its

More The Same LessPricePrice

Morefor

More

Morefor less

Morefor

the same

The samefor less

Lessfor

much less


7-32

Communicating and Delivering the Chosen Position

• Concrete action• Easier to develop than

implement• Positions can be

quickly lost


7-33

Chapter Review

• What are the three steps of target marketing?

• What are the major levels of market segmentation?

• How do you identify an attractive market opportunity and choose strategies?

• How do position a product for competitive advantage?

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