Ch07 Express 1

Copyright © 2007 Pearson Education Canada7-1

Marketing: An Introduction Second Canadian Edition

Armstrong, Kotler, Cunningham, Mitchell and Buchwitz

Chapter SevenSegmentation, Targeting and

Positioning: Building the Right Relationships with the Right

Customers


Looking Ahead• Define the three steps of target marketing: market

segmentation, market targeting and market positioning.

• List and discuss the major bases for segmenting consumer and business markets.

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

• Discuss how companies position their products for maximum competitive advantage in the marketplace.


Segmentation/Positioning• Segment markets.

– Identify bases for segmentation.– Develop segmentation profiles.

• Target segment(s).– Measure of segment attractiveness.– Select the target segment(s).

• Position for target segment(s).– Develop positioning for each segment.– Develop appropriate marketing mix.


Segmentation Variables• Geographic.

– Area, population density, climate etc.

• Demographic.– Age, sex, lifecycle, income, job, etc

• Psychographic.– Lifestyle, personality.

• Behavioural.– Benefits sought, status, usage rate,

loyalty, attitudes, etc.


Geographic Segmentation• World region or country.

• Region of country.

• City or metro size.

• Density or climate.


Demographic Segmentation

• Age, gender, family size, income, occupation, etc.

• The most popular bases for segmenting customer groups.

• Easier to measure than most other types of variables.



• Gender.– Women make 90% of home improvement decisions.– Women influence 80% of all household consumer

purchases.

• Income.– Identifies and targets the affluent for luxury goods.– People with low annual incomes can be a lucrative

market.– Some manufacturers have different grades of

products for different markets.



• Age and life-cycle.– Do not necessarily match.

• Middle aged people starting new families.• Seniors going back to university or college .

– Products targeted at age or life-cycle stages.• P&G has different toothpastes for different age

groups.

– Avoid stereotypes in promotions.– Promote positive messages.


Psychographic Segmentation• Dividing a market into different groups

based on: – Social class.– Lifestyle.– Personality characteristics.

• Targeting whitening toothpaste at psychographic segment who are active and concerned about sexual attractiveness.


Behavioural Segmentation• Occasions.

– Special promotions for holidays.• (e.g., Hershey Kisses).

– Special products for special occasions.• (e.g., Kodak disposable cameras).

• Benefits sought.– Different segments desire different benefits

from products.• e.g., P&G’s multiple brands of laundry detergents

to satisfy different needs in the product category.


Behavioural Segmentation

• User status.– Nonusers, ex-users.– Potential users.– First-time users.– Regular users.

• Usage rate.– Light.– Medium.– Heavy.

• Loyalty status.– Brands.– Stores.– Companies.


Market Segmentation

• Best to use multiple approaches in order to identify smaller, better-defined target groups.

• Start with a single base and then expand to other bases.


Segmenting Business Markets

• Consumer and business markets use many of the same variables for segmentation.

• Business marketers can also use:– Operating characteristics.– Purchasing approaches.– Situational factors.– Personal characteristics.


Segmenting International Markets

• Factors for segmenting foreign markets. – Geographic location.– Economic situation.– Culture.– Political and legal situation and issues.

• Intermarket segmentation.– When there is little difference across

international markets.– Teenagers all over the world tend to be the

same.


Evaluating Market Segments• Segment size and growth.

– Analyze current segment sales, growth rates and expected profitability.

• Segment structural attractiveness.– Consider effects of: competitors, existence of

substitute products, the power of buyers/suppliers.

• Company objectives and resources.– Examine company skills and resources needed to

succeed in that segment.– Offer superior value/gain competitive advantage.


Segment Success Criteria• Measurable - Ability to measure

numerically.• Accessible - Ability to reach segment.• Substantial – Ability to support the

business.• Differentiable – Ability to find unique

position in segment.• Actionable – Ability to pursue and

capture the segment.


Levels of Segmentation• Mass marketing.

– No segments and single marketing mix.

• Differentiated marketing.– Large segments with specific marketing mixes.

• Niche marketing.– Small segments with specialized marketing

mixes.

• Micro-marketing.– Customized marketing to individuals.


Undifferentiated Marketing• Focus is on common (not different)

needs of consumers.

• Product and marketing program are geared to the largest number of buyers.

• Uses mass advertising and distribution.

• Henry Ford’s Model T excellent example of undifferentiated or mass marketing.


Differentiated Marketing• Firm targets several market segments

and designs separate offers for each.• The goal is to have higher sales and a

stronger position with each market segment.

• This approach increases the costs of doing business.

• General Motors claims to make a car for every segment.


Niche Marketing

• The focus is acquiring a large share of one or a few segments of niches.

• Generally, there are fewer competitors.

• The Internet is ideal for targeting small niche markets.

• There is some risk in focusing on only one market.


Micromarketing

• Tailoring products and marketing programs to suit the tastes of specific individuals and locations.– Local Marketing: Tailoring brands and promotions

to the needs and wants of local customer groups—cities, neighbourhoods, specific stores.

– Individual Marketing: Tailoring products and marketing programs to the needs and preferences of individual customers.


Mass Customization

• The process of creating customer-unique value by designing products and services tailor-made to individual needs, on a large scale.

• Having your next car or sneakers built to order?


Market Coverage Strategy

• Company resources.

• Degree of product variability.

• Product life cycle stage.

• Market viability.

• Competitors’ marketing strategies.


Socially Responsible Target Marketing

• Smart targeting helps both companies and consumers.

• Target marketing sometimes generates controversy and concern.– Vulnerable and disadvantaged can be targeted.– Cereal, cigarette, beer and fast-food marketers

have received criticism. – Internet has raised fresh concerns about potential

targeting abuses.


Successful Positioning• Product position.

– How a product is viewed by consumers relative to competing products.

• Three positioning steps.– Identify competitive advantages on which to

build a differentiated position.– Choose the right competitive differentiation.– Select an overall positioning strategy.


Gaining Competitive Advantage

• Key to winning target customers is to understand their needs better than competitors do and to deliver more value.

• Competitive advantage – extent to which a company can position itself as providing superior value.


Identifying Competitive Advantage

• Product differentiation.– Consistency, durability, reliability, reparability.

• Services differentiation.– Speed, convenience, careful delivery.

• Image differentiation.– Convey benefits and positioning.

• People differentiation.– Hiring, training better people than competition


Successful Differentiation• Important – of value to consumers.• Distinctive – obvious and clear.• Superior – better value than

competitors.• Communicable – explainable.• Pre-emptive – defendable and unique.• Affordable – delivers value for cost.• Profitable – company can make

money.


Positioning Errors• Under-positioning.

– Failing to really position the company at all.

• Over-positioning.– Giving buyers too narrow a picture of the

company.

• Confused positioning.– Leaving buyers with a confused image of a

company.


Value Propositions

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Looking Back• Define the three steps of target marketing:

market segmentation, market targeting and market positioning.

• List and discuss the major bases for segmenting consumer and business markets.

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

• Discuss how companies position their products for maximum competitive advantage in the marketplace.

Date post:	14-Sep-2014
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