Market Segmentation, Targeting, and Positioning

Market Segmentation, Targeting, and PositioningSteps in Segmentation, Targeting, and Positioning2. Develop Profiles of Resulting Segments1. Identify Bases for Segmenting the Market3. Develop Measures of Segment Attractiveness4. Select Target Segment(s)5. Develop Positioning for Each Target Segment6. Develop Marketing Mix for Each Target SegmentMarket PositioningMarket targetingMarket SegmentationSteps in Segmentation, Targeting, and PositioningMarket Segmentation. Market segmentation is the process of dividing a market into distinct groups of buyers who might require separate products or marketing mixes. All buyers have unique needs and wants. Still it is usually possible in consumer markets to identify relatively homogeneous portions or segments of the total market according to shared preferences, attitudes, or behaviors that distinguish them from the rest of the market. These segments may require different products and/or separate mixes.Market Targeting. Market targeting is the process of evaluating each market segment's attractiveness and selecting one or more segments to enter. Given effective market segmentation, the firm must choose which markets to serve and how to serve them. Discussion Note: In targeting markets to serve the firm must consider its resources and objectives in setting strategy. Market Positioning. Market positioning is the process of formulating competitive positioning for a product and a detailed marketing mix. Marketers must plan how to present the product to the consumer. Discussion Note: The product's position is defined by how consumers view it on important attributes. Steps in Segmentation, Targeting, and PositioningThis CTR corresponds to Figure 7-1 on p. 196 and relates to the material on pp. 196.Market segmentation Is the act Dividing a market into distinct group of buyers with different needs, characteristics, or behavior who might require separate products or marketing mixes.Levels of marketing segmentationLocal marketing Tailoring brands and promotions to the needs and wants of local customer groups.Individual marketing Tailoring products and marketing programs to the needs and preferences of individual costumers Also labelled market of one marketing customized marketing and one to one marketingBASES FOR SEGMENTATION CONSUMER MARKETS Major segmentation Variable of business markets- Demographic- Operating Variables- Purchasing Approach- Situational Factors- Personal CharacteristicsIntermarket segmentation Forming segments of consumers who have similar needs and buying behavior even though they are located in different countries. Market SegmentationRequirements for Effective Segmentation Size, purchasing power, profiles of segments can be measured. Segments must be effectivelyreached and served. Segments must be large or profitable enough to serve. MeasurableAccessibleSubstantialDifferentialActionable Segments must respond differently to different marketing mix elements & actions. Must be able to attract and serve the segments.Effective SegmentationThis CTR relates to the material on pp. 215.Requirements for Effective SegmentationMeasurability . This refers to the degree to which the size and purchasing power of the segments can be measured. The accuracy and availability of measures of market potential are important.Accessibility. This refers to the degree to which a market segment can be reached and served. Identifying a segment is useless if the marketer has limited access to the customer.Substantiality. This refers to the degree to which the segments are large or profitable enough to service.Actionability. This is the degree to which an effective marketing program can be designed for attracting and serving segments. Company resource limitations figure prominently in actionability issues.

Market Targeting The process of evaluating each market segments attractiveness and selecting one or more segments to enter.Evaluating Market Segment In evaluating different market segments, a firm must look at three factors:Segment size and growth- Analyze sales, growth rates and expected profitabilitySegment structural attractiveness - Consider effects of: Competitors, Availability of Substitute Products and, the Power of Buyers & Suppliers.And Company objectives and resourcesConsider effects of: Competitors, Availability of SubstituteProducts and, the Power of Buyers & Suppliers.

Selecting market segments After evaluating different segments, the company must decide which and how many segments to serve.Three alternative market coverage strategiesUndifferentiated marketingDifferentiated marketingConcentrated marketingUndifferentiated marketing A market-coverage strategy in which a firm decides to ignore market segment differences and go after the whole market with one offerDifferentiated marketing A market-coverage strategy in which a firm decides to target several market segments and designs separate offers for each.Concentrated marketing A market-coverage strategy in which a firm goes after a large share of one or a few submarketsChoosing a market-coverage strategy Many factors need to be considered when choosing a market-coverage strategy. which strategy is the best depends on Company Resources. When the firms resources are limited, concentrated marketing makes the most sense. The best strategy also depends on the degree of Product Variability. The life-cycle stage also must be considered. when the firms introduces a new product, it is practical to launch only one version and undifferentiated marketing. Choosing a market-coverage strategy Another factor is market variability if most buyers have the same tastes, buy the same amounts, and react the same way to marketing efforts, undifferentiated marketing is appropriate. Finally, Competitors marketing strategies are important. When competitors use segmentation, undifferentiated marketing can be suicidal. Conversely, when competitors use undifferentiated marketing, firm can gain an advantage by using differentiated or concentrated marketing. POSITIONING FOR COMPETITIVE ADVANTAGEProducts Position - the place the product occupies in consumers minds relative to competing products

Marketers must:- Plan positions to give products the greatest advantage- Develop marketing mixes to create planned positions

Positioning for Competitive Advantage: StrategiesAgainst aCompetitorUsageOccasionsAway fromCompetitorsProductAttributesProductClassesBenefitsOfferedUsersProduct PositioningThis CTR relates to the material on pp. 220.Market Positioning StrategiesA product's position is the way the product is defined by consumers on important attributes. More directly, product position is the place the product occupies in the consumers minds relative to competing products. Discussion Note: Students may need prompting to realize that marketers dont control the products position, consumers do. The strategies discussed below represent the inputs marketers make to influence how the consumer ultimately determine the products position.A product's position can be based on a number of variables including:Product Attributes. This positions the product on unique or distinguishing features it possesses such as a low price, unique technology, versatility or other features.Benefits Offered. Positioning can be based upon the specific value provided.Usage Occasions. The product usage associated can with special occasions or values ("Andre for the Holidays")Users. A product can be positioned to its most important users (Miller Beer's heavy user positioning, "Tastes Great Less Filling")Against a Competitor. This strategy is appropriate for substitutes that cost less.Away from Competitors. This positions the product as unique in some respect and/or worth it.Product Class. The company may vary positioning as needed in relation to one or more competitors.Steps to Choosing and Implementing a Positioning StrategyStep 1. Identifying a set of possible competitive advantages: Competitive Differentiation.

Step 2. Selecting the right competitive advantage.

Step 3. Effectively communicating and delivering the chosen position to the market.Developing Competitive DifferentiationProductServicePersonnelImageAreas for CompetitiveDifferentiationCompetitive Advantage Competitive Advantage is created by differentiating the product from those of competitors. Key areas for competitive differentiation include:Product Differentiation. This can be based upon features or performance. Teaching Tip: Drive a Hyundai and a Lexus on the same afternoon to experience performance differentiation.Services Differentiation. This may come from delivery, installation, repair, or training advantages. Teaching Tip: Does anyone think that television cable service would not improve if there were more than one cable provider per area?Personnel Differentiation. This is derived from a superior workforce. Teaching Tip: Surely students appreciate their experience in your class versus those marketing classes at that other school in state?Image Differentiation. This can be generated from effective use of symbols in association with product consumption.Teaching Tip: Examples of effective use of symbols include Prudential Securities, Rock Solid - Market Wise and Merrill Lynch Bullish on America.Positioning for Competitive AdvantageThis CTR relates to the discussion on pp. 221-223.Selecting the Right CompetitiveAdvantagesCriteriaforDeterminingWhichDifferencestoPromoteAffordableSuperiorProfitablePreemptiveDistinctiveImportantCommunicablePromoting DifferencesThis CTR relates to the material on pp. 223-226. Discussion Note: The key to selecting the right competitive advantage is to develop a unique selling proposition (USP) for the product and stick to it.Selecting the Right Competitive AdvantageDifferences selected to promote competitive advantage should satisfy the following criteria:Important. The difference must deliver a highly valued benefit to target buyers.Distinctive. Competitors do not offer the difference, or the company offers the difference in a more distinctive way.Superior. The difference should be superior to other ways that customers might obtain the same benefit.Communicable. The difference is communicable and visible to buyers.Preemptive. Competitors cannot easily copy the difference. This may be a result of innovative technology, production economies, distribution economies, and/or proprietary rights.Affordable. Buyers in the target market must be able to pay for the difference.Profitable. The difference must be profitable for the company to offer.