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PRINCIPLES OF MARKETING

Chapter 7 Chapter 7 Market Segmentation, Targeting, and Positioning for Competitive Advantage

Steps in Segmentation, Steps in Segmentation, Targeting, and Positioning Targeting, and Positioning
6. Develop Marketing Mix for Each Target Segment 5. Develop Positioning for Each Target Segment 4. Select Target Segment(s) 3. Develop Measures of Segment Attractiveness 2. Develop Profiles of Resulting Segments 1. Identify Bases for Segmenting the Market

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Market Positioning Market Targeting

Market Segmentation

Step 1. Market Segmentation Step 1. Market Segmentation

Levels of Market Segmentation Levels of Market Segmentation
Same product to all consumers Same product to all consumers (no segmentation) (no segmentation) Different products to one or more segments Different products to one or more segments (some segmentation) (some segmentation) Different products to subgroups within segments Different products to subgroups within segments (( more segmentation) more segmentation) Products to suit the tastes of individuals or locations Products to suit the tastes of individuals or locations (complete segmentation) (complete segmentation)

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Mass Marketing Mass Marketing

Segment Marketing Segment Marketing

Niche Marketing Niche Marketing

Micromarketing Micromarketing

Step 1. Market Segmentation Step 1. Market Segmentation

Bases for Segmenting Consumer Bases for Segmenting Consumer Markets Markets
Geographic
Nations, states, regions or cities

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Demographic
Age, gender, family size and life cycle, or income

Psychographic
Social class, lifestyle, or personality

Behavioral
Occasions, benefits, uses, or responses

Using Multiple Segmentation Using Multiple Segmentation Bases: Geodemographics Bases: Geodemographics

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Step 1. Market Segmentation Step 1. Market Segmentation

Bases for Segmenting Business Bases for Segmenting Business Markets Markets
Personal Characteristics

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Demographics

Situational Factors

Bases Bases for Segmenting for Segmenting Business Business Markets Markets Purchasing Approaches

Operating Characteristics

Step 1. Market Segmentation Step 1. Market Segmentation

Bases for Segmenting International Bases for Segmenting International Markets Markets

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Industrial Markets Industrial Markets

Geographic Geographic

Economic Economic

Political/ Political/ Legal Legal

Cultural Cultural

Intermarket Intermarket

Step 1. Market Segmentation Step 1. Market Segmentation

Measurable Measurable Accessible Accessible Substantial Substantial Differential Differential Actionable Actionable

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Requirements for Effective Segmentation Requirements for Effective Segmentation

Size, purchasing power, profiles of segments can be measured. Segments must be effectively reached and served.

Segments must be large or profitable enough to serve.

Segments must respond differently to different marketing mix elements & actions. Must be able to attract and serve the segments.

Step 2. Market Targeting Step 2. Market Targeting

Evaluating Market Segments Evaluating Market Segments Segment Size and Growth
Analyze sales, growth rates and expected profitability.

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Segment Structural Attractiveness

Consider effects of: Competitors, Availability of Substitute Products and, the Power of Buyers & Suppliers.

Company Objectives and Resources

Company skills & resources relative to the segment(s). Look for Competitive Advantages.

Step 2. Market Targeting Step 2. Market Targeting

Market Coverage Strategies Market Coverage Strategies
Company Company Marketing Marketing Mix Mix
A. Undifferentiated Marketing

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Market Market

Company Company Marketing Mix 1 Marketing Mix 1 Company Company Marketing Mix 2 Marketing Mix 2 Company Company Marketing Mix 3 Marketing Mix 3
B. Differentiated Marketing

Segment 1 Segment 1 Segment 2 Segment 2 Segment 3 Segment 3

Company Company Marketing Marketing Mix Mix

C. Concentrated Marketing

Segment 1 Segment 1 Segment 2 Segment 2 Segment 3 Segment 3

Step 2. Market Targeting Step 2. Market Targeting

Company Resources Product Variability

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Choosing a Market-Coverage Strategy Choosing a Market-Coverage Strategy

Products Stage in the Product Life Cycle Market Variability Competitors Marketing Strategies

Step 3. Positioning for Competitive Step 3. Positioning for Competitive Advantage Advantage
Products Position - the place the product occupies in consumers minds relative to competing products; i.e. Volvo positions on safety. Marketers must:

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Plan positions to give products the greatest advantage Develop marketing mixes to create planned positions

Step 3. Positioning for Competitive Step 3. Positioning for Competitive Advantage: Strategies Advantage: Strategies
Product Product Class Class Away from Away from Competitors Competitors Against a Against a Competitor Competitor
EE

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Product Product Attributes Attributes Benefits Benefits Offered Offered

D D B B FF

H H

G G C C A A

Usage Usage Occasions Occasions

Users Users

Steps to Choosing and Implementing Steps to Choosing and Implementing a Positioning Strategy a Positioning Strategy
Step 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.

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Developing Competitive Developing Competitive Differentiation Differentiation

Product Product Service Service

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Areas for Competitive Areas for Competitive Differentiation Differentiation

Personnel Personnel

Image Image

Selecting the Right Competitive Selecting the Right Competitive Advantages Advantages
Important Important Criteria for Determining Which Differences to Promote

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Profitable Profitable

Distinctive Distinctive

Affordable Affordable

Superior Superior

Preemptive Preemptive

Communicable Communicable