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Instructor’s Visual Index

Armstrong/ Kotler Chapter 6: Market Segmentation, Targeting, and Positioning for Competitive Advantage.

Lesson Objectives
• When you have completed this lesson you will be able to;
– Summarise the relationship between market segmentation, targeting and positioning

Market Segmentation, Targeting, and Positioning

– Identify and describe the major variables for consumer segmentation – Outline how companies select target markets and implement segmentation strategies – Show how market segmentation and the marketing mix are interlinked in the positioning strategy

The STP Process
• Segmentation is the process of classifying customers into groups which share some common characteristic • Targeting involves the process of evaluating each segments attractiveness and selecting one or more segments to enter • Positioning is arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the mind of the consumer

Target Market
• A market is a set of all actual and potential buyers • A target market is a group of people toward whom a firm markets its goods, services, or ideas with a strategy designed to satisfy their specific needs and preferences. • Any marketing strategy must include a detailed (specific) description of this.

Advantages of Segmentation
1. The process of breaking up a homogeneous market into heterogeneous segments forces the marketer to analyse and consider both the needs of the market and the company’s ability to competently serve those needs – thereby making the company better informed about its customers 2. Competitor offerings and marketing positioning must also be analysed in this context so the company must consider what its competitive advantages and disadvantages are, helping it to clarify its own positioning strategy 3. Limited resources are used to best advantage, targeted at those segments that offer the best potential

Requirements for Effective Segmentation

Measurable

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

Accessible

Substantial

• Segments are large or profitable enough to serve.

Differential

• Segments must respond differently to different marketing mix elements & programs. • Effective programs can be designed to attract and serve the segments.

Actionable

© Copyright 2000 Prentice Hall

Develop Selection Criteria 2. family size and life cycle. and regular users of a product Usage rate divides buyers into light. or respond to a product Benefit segmentation requires finding the major benefits people look for in the product class. Identify Bases for Segmenting the Market Market Positioning Segment Marketing Different products to one or more segments (some segmentation) Market Targeting Niche Marketing Different products to subgroups within segments (more segmentation) Micromarketing Market Segmentation Products to suit the tastes of individuals and locations (complete segmentation) Local Marketing Tailoring brands/ promotions to local customer groups Individual Marketing Tailoring products/ programs to individual customers Step 1. loyalty 7-15 Market Segmentation Market Segmentation Segmenting Consumer Markets User status divides buyers into ex-users. better-defined target groups Geodemographic segmentation is an example of multivariable segmentation that divides groups into consumer lifestyle patterns 7-16 7-18 © Copyright 2000 Prentice Hall . first-time users. gender. actually make purchases. Step 1. and Positioning for Competitive Advantage. usage rate. the kinds of people who look for each benefit. Develop Marketing Mix for Each Target Segment 5. user status. medium. and heavy product users Loyalty status divides buyers into groups according to their degree of loyalty Using Multiple Segmentation Bases Multiple segmentation is used to identify smaller. states. or personality Behavioural Occasions. Develop Positioning for Each Target Segment 4. potential users. and Positioning 6. Market Segmentation Levels of Market Segmentation Mass Marketing Same product to all consumers (no segmentation) Steps in Segmentation.Instructor’s Visual Index Armstrong/ Kotler Chapter 6: Market Segmentation. Select Target Segment(s) 3. and the major brands that deliver each benefit Demographic Age. benefits sought. Targeting. lifestyle. regions or cities Market Segmentation Segmenting Consumer Markets Occasion segmentation divides buyers into groups according to occasions when they get the idea to buy. or income Psychographic Social class. Market Segmentation Bases for Segmenting Consumer Markets Geographic Nations. Develop Profiles of Resulting Segments 1. Targeting.

segment the Irish clothing Industrial Markets Geographic Economic Political/ Legal market. Targeting. These groups segment people and locations into marketable groups of like-minded consumers that exhibit unique characteristics and buying behavior based on a host of demographic factors. Market Segmentation Bases for Segmenting Business Markets Personal Characteristics Segmenting Business Markets • Segmentation by customer size or geographic location • Four segments of business customers Demographics Situational Factors Bases for Segmenting Business Markets Operating Characteristics – Programmed buyers – Relationship buyers – Transaction buyers – Bargain hunters Purchasing Approaches Step 1. Using Multiple Segmentation Bases Prizm classifications include • • • • • Age Educational level Income Occupation Family composition • Ethnicity • Housing • Behavioral and lifestyle factors • Purchases • Free-time activities • Media preferences 7-20 7-19 Step 1. and Positioning for Competitive Advantage.Instructor’s Visual Index Armstrong/ Kotler Chapter 6: Market Segmentation. Cultural Intermarket © Copyright 2000 Prentice Hall . Market Segmentation Market Segmentation Using Multiple Segmentation Bases PRIZM NE classifies every American household into 66 unique segments organized into 14 different social groups. >Describe each of the major segments and subsegments. Market Segmentation Bases for Segmenting International Markets Linking the Concepts • Using the segmentation bases you’ve just heard about.

growth rates and expected profitability for various segments. pick two companies that serve this market and describe their segmentation and targeting strategies.the place the product occupies in consumers’ minds relative to competing products. Market Targeting • Segment Size and Growth – Analyze sales. Market Targeting Linking the Concepts • At the last ‘linking the concepts’. and Positioning for Competitive Advantage. • Marketers must: – Plan positions to give their products the greatest advantage in selected target markets. Positioning for Competitive Advantage: Strategies Product Class Away from Competitors Product Attributes Benefits Offered D B F H G C A Against a Competitor E Usage Occasions User Class © Copyright 2000 Prentice Hall . > Now. Undifferentiated Marketing Evaluating Market Segments (developing selection criteria) Step 2.the way the product is defined by consumers on important attributes . Concentrated Marketing Choosing a Market-Coverage Strategy Company Resources Product Variability Product’s Life-Cycle Stage Market Variability Competitors’ Marketing Strategies Step 2.Instructor’s Visual Index Armstrong/ Kotler Chapter 6: Market Segmentation. Company Marketing Mix 1 Company Marketing Mix 2 Company Marketing Mix 3 B. Market Targeting Market Coverage Strategies Company Marketing Mix A. the Power of Buyers & Suppliers. – Look for Competitive Advantages. Differentiated Marketing Segment 1 Segment 2 Segment 3 • Company Objectives and Resources – Company skills & resources relative to the segment(s). Availability of Substitute Products and. Step 3. Positioning for Competitive Advantage • Product’s Position . you segmented the Irish clothing market. Company Marketing Mix Segment 1 Segment 2 Segment 3 C. Market • Segment Structural Attractiveness – Consider effects of: Competitors. – Design marketing mixes to create these planned positions. Targeting. Step 2. > Can you come up with one that targets many different segments versus another that focuses on only one or a few segments? • How does each company you choose differentiate its marketing offer and image? • How has each done a good job of establishing this differentiation in the minds of targeted consumers? Step 3.

Instructor’s Visual Index Armstrong/ Kotler Chapter 6: Market Segmentation. Communicating and Delivering the Chosen Position. Developing Competitive Differentiation Product Service Steps to Choosing and Implementing a Positioning Strategy • Step 1. • Discuss how companies position their products for maximum competitive advantage in the marketplace. • Explain how companies identify attractive market segments and choose a market coverage strategy. and market positioning. Identifying Possible Competitive Advantages: Competitive Differentiation. • Step 4. • Step 3. Support the positioning strategy with a unique marketing mix Areas for Competitive Differentiation Image People Selecting the Right Competitive Advantages Important Step 4 – Supporting the positioning strategy • At this stage the company has decided on its Profitable Affordable Criteria for Determining Which Differences to Promote Distinctive positioning strategy and must now design a marketing mix to support this strategy. • Step 2. • List and discuss the major levels of market segmentation and bases for segmenting consumer and business markets. Targeting. © Copyright 2000 Prentice Hall . Selecting the Right Competitive Advantage: Unique Selling Proposition (USP). market targeting. and Positioning for Competitive Advantage. The next part of the Superior course looks at ‘Developing the Marketing Mix’ Communicable Preemptive Reviewing the Concepts • Define the three steps of target marketing: market segmentation.