Developing the Value Offeringchapter 09SEGMENTATION, TARGET MARKETING, AND POSITIONING

chapter 10THE PRODUCT EXPERIENCE: PRODUCT STRATEGY

chapter 11THE PRODUCT EXPERIENCE: BUILDING THE BRAND

chapter 12THE PRODUCT EXPERIENCE: NEW PRODUCT DEVELOPMENT

chapter 13SERVICE AS THE CORE OFFERING

chapter 14MANAGING PRICING DECISIONS

part THREE

Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reservedMcGraw-Hill/Irwin

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CHAPTERCHAPTER

SEGMENTATION, TARGET MARKETING, AND POSITIONING

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LEARNING OBJECTIVES

Explain the criteria for effective segmentation

Identify the various approaches to market segmentation

Describe the steps in target marketing

Understand the continuum of approaches to target marketing strategy

Define positioning and link it to the use of the marketing mix

Use and interpret perceptual maps

Identify sources of differentiation

Avoid potential positioning errors

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FULFILLING CONSUMER NEEDS AND WANTSMarket Segmentation

Target Marketing

Positioning

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MARKET SEGMENTATION, TARGET MARKETING, AND POSITIONING

EXHIBIT 9.1

Market SegmentationDividing a market into meaningful smaller markets or submarkets based on common characteristics.

Target MarketingEvaluating the market segments, then making decisions about which among them is most worthy of investment for development.

PositioningCommunicating one or more sources of value to customers in ways that connect needs and wants to what the product has to offer. Positioning strategies are executed through the development of unique combinations of the marketing mix variables.

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WHAT IS SEGMENTATION?

Segmentation seeks to find one or more factors about members of a heterogeneous market that allow for dividing of the market into smaller, more homogeneous subgroups

The purpose would be to develop different marketing strategies to best meet the segments’ distinct needs and wants.

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CRITERIA FOR EFFECTIVE SEGMENTATION1. Is the segment of sufficient size?

2. Is the segment readily identifiable and can it be measured?

3. Is the segment clearly differentiated on one or more important dimensions?

4. Can the segment be reached in order to deliver the value of the product?

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SEGMENTING CONSUMER MARKETS

Geographic Segmentation

By region

By density of

population

By size of populatio

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By growth in

population

By climate

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SEGMENTING CONSUMER MARKETS

Demographic Segmentation

Age

Generational Group

Gender

Family and Household

Race and Ethnicity

Income

Occupation

Education

Social Class

Geodemographics

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SEGMENTING CONSUMER MARKETSPsychographic Segmentation

◦ VALS™ (Values and Lifestyles)

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VALS™ FRAMEWORKEXHIBIT

9.11

Reprinted with permission from VALSTM Program, SRI Consulting Business Intelligence (SRIC-BI); www.sric-bi.com/VALS.

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SEGMENTING CONSUMER MARKETSBehavioral Segmentation

◦ Benefits Sought

◦ Usage Patterns

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SEGMENTING CONSUMER MARKETSFirms use Multiple Segmentation

Approaches Simultaneously

◦ Firms develop a profile of a segment that might include aspects of any or all of the segmentation approaches we have learned.

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VISUAL EXAMPLES OF SEVERAL SEGMENTATION APPROACHES

EXHIBIT 9.13

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SEGMENTING BUSINESS MARKETSDemographic

Industry

Company Size

Location

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SEGMENTING BUSINESS MARKETSOperating Variables

Technology

User Status

Customer Capabilities

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SEGMENTING BUSINESS MARKETSPurchasing Approaches

Purchasing Function Organization

Power Structure

Nature Of Existing Relationship

General Purchasing Policies

Purchasing Criteria

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SEGMENTING BUSINESS MARKETSSituational Factors

Urgency

Specific Application

Size of the Order

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SEGMENTING BUSINESS MARKETSPersonal Characteristics

Buyer-Seller Similarity

Attitudes Toward Risk

Loyalty

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TARGET MARKETING

Analyze Market Segments

Segment Size and Growth Potential

Segment Competitive

Forces

Strategic Fit of the Segment

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TARGET MARKETING

Develop Profiles of Each Potential Target Market

Primary Target Markets

Secondary Target Markets

Tertiary Target Markets

Target markets to abandon for future development

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CONTINUUM OF TARGET MARKETING APPROACHESEXHIBIT

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VeryBroad

VeryNarro

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Undifferentiatedtarget marketing

Differentiatedtarget marketing

Concentratedtarget marketing

Customizedtarget marketing

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TARGET MARKETING

Select a Target Marketing ApproachDifferentiated Target Marketing

Customized (One-to-One) Marketing

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POSITIONING

The firm must turn its attention to creating, communicating, and delivering the value offering to the target markets.

Positioning the product so that consumers understand its ability to fulfill their needs and wants.

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EXAMPLES OF PERCEPTUAL MAPS USED IN POSITIONING DECISIONS

EXHIBIT 9.16

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EXAMPLES OF PERCEPTUAL MAPS USED IN POSITIONING DECISIONS

EXHIBIT 9.16

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EXAMPLES OF PERCEPTUAL MAPS USED IN POSITIONING DECISIONS

EXHIBIT 9.16

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SOURCES OF DIFFERENTIAL COMPETITIVE ADVANTAGE

Price Leadership

Innovative Leadership

Service Leadership

Product Leadership

Personnel Leadership

Convenience

Leadership

Image Leadership

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POSITIONING ERRORS

Underpositioning

Overpositioning

Confused Positioning

Doubtful Positioning

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