Marketing Management

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 Selecting Target Market
Segments

• A target market consists of a set of buyers

who share common
needs or
characteristics that
the company
decides to serve.

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 Market Targeting
Effective Segmentation Criteria
Measurable
Substantial
Accessible
Differentiable
Actionable

Measurable. The size, purchasing power, and characteristics of the segments can be
measured.
Substantial. The segments are large and profitable enough to serve. A segment should be
the largest possible homogeneous group worth going after with a tailored marketing program. It
would not pay, for example, for an automobile manufacturer to develop cars for people who are
less than four feet tall.
Accessible. The segments can be effectively reached and served.
Differentiable. The segments are conceptually distinguishable and respond differently to
different marketing-mix elements and programs. If married and unmarried women respond
similarly to a sale on perfume, they do not constitute separate segments.
Actionable.
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 Evaluating and Selecting Segments
In evaluating different market segments, the firm must look at two factors:
1. the segment’s overall attractiveness and
2. the company’s objectives and resources.

Multiple segment
specialization

Full market coverage Single-segment

concentration
Marketers have a range or continuum of
possible levels of segmentation that can
guide their target market decisions.
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 Levels of Segmentation
Full market coverage: a firm attempts to serve all customer groups with all the products they
might need.
•Undifferentiated or mass marketing, the firm ignores segment differences and goes after the
whole market with one offer.
•Differentiated marketing, the firm sells different products to all the different segment of the
market.

Multiple Segment Specialization: With selective specialization, a firm selects a subset of

all the possible segments, each objectively attractive and appropriate .
A supersegment is a set of segments sharing some exploitable similarity. A firm can also
attempt to achieve some synergy with product or market specialization.
•product specialization, the firm sells a certain product to several different market segments.
•market specialization, the firm concentrates on serving many needs of a particular customer
group, such as by selling an assortment
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International Business
Management Levels of Segmentation
Single-segment concentration: the firm markets to only one particular segment.
Porsche concentrates on the sports car market and Volkswagen on the small-car
market. A niche is a more narrowly defined customer group seeking a distinctive
mix of benefits within a segment.

Individual Marketing: “segments of one,” “customized marketing,” or “one-to-one

marketing.” Customerization combines operationally driven mass customization
with customized marketing in a way that empowers consumers to design the
product and service offering of their choice.

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 Market Targeting
Selecting Target Segments

Undifferentiated (mass) marketing: A market-coverage strategy in which a firm

decides to ignore market segment differences and go after the whole market with
one offer.
Differentiated (segmented) marketing: A market-coverage strategy in which a
firm decides to target several market segments and designs separate offers
for each.
Concentrated (niche) marketing: A market-coverage strategy in which a firm
goes after a large share of one or a few segments or niches.

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 Market Targeting
Michael Porter has identified five forces that determine the intrinsic long-run
attractiveness of a market or market segment:

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 Market Targeting
Threat of intense segment rivalry—A segment is unattractive if it already contains
numerous, strong, or aggressive competitors.. The cellular phone market has seen fierce
competition due to segment rivalry.

Threat of new entrants—The most attractive segment is one in which entry barriers are
high and exit barriers are low. The worst case is when entry barriers are low and exit
barriers are high: Here firms enter during good times but find it hard to leave during bad
times. The result is chronic overcapacity and depressed earnings for all.

Threat of buyers’ growing bargaining power—A segment is unattractive if buyers

possess strong or growing bargaining power. The rise of retail giants such as Walmart
has led some analysts to conclude that the potential profitability of packaged-goods
companies will become curtailed.
Threat of substitute products—A segment is unattractive when there are actual
or potential substitutes for the product. Substitutes place a limit on prices and on
profits. Skype has severely challenged profitability for long distance calls

Threat of suppliers’ growing bargaining power—A segment is unattractive if

the company’s suppliers are able to raise prices or reduce quantity supplied.
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 Differentiation & Positioning

• The company must decide on a value proposition:

• How it will create differentiated value for targeted segments

• What positions it wants to occupy in those segments

• Product position - The way a product is defined by consumers on

important attributes

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 Differentiation

What is Differentiation?

Differentiation is a process that presents a

product in a way that is perceived by the
consumer as different from anything offered
by competitors in that same product category.

• A marketing process that showcases the

differences between products.
• Differentiation looks to make a product more
attractive by contrasting its unique qualities
with other competing products

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 Differentiation

What is Differentiation?

Differentiation is a process that presents a

product in a way that is perceived by the
consumer as different from anything offered
by competitors in that same product category.

• A marketing process that showcases the

differences between products.
• Differentiation looks to make a product more
attractive by contrasting its unique qualities
with other competing products

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 Differentiation

Differentiation involves actually

differentiating the firm’s market
offering to create superior customer
value.

Successful product differentiation creates a competitive

advantage for the seller, as customers view these
products as unique or superior.

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 Differentiation and Positioning
oduct positioning :
The act of designing a company’s offering and image to
occupy a distinctive place in the minds of the target
market.

The way the product is defined

by consumers on important attributes—
the place the product occupies in
consumers’ minds relative to competing
products
- Perceptions
- Impressions
- Feelings
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 Differentiation and Positioning

• Identifying possible value differences and

competitive advantages:
– Key to winning target customers is to understand
their needs better than competitors do and to
deliver more value.
– Finding points of differentiation requires that
marketers examine the entire customer
experience.

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 Differentiation
A firm can create differentiation on:

Companies can also gain a strong

competitive advantage through people
differentiation — hiring and training better
people than their competitors do.

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 Differentiation
• Firms that practice channel
differentiation gain competitive
advantage through the way they
design their channel’s coverage,
expertise, and performance.

Companies can also gain a strong

competitive advantage through people
differentiation — hiring and training better
people than their competitors do.

• Even when competing offers look the same,

buyers may perceive a difference based on
company or brand image differentiation. A
company or brand image should convey a
product’s distinctive benefits and positioning.
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 Number of Intermediaries
Exclusive Distribution

Intensive Distribution

Selective Distribution

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 Differentiation and Positioning
Map
In planning their differentiation and positioning
strategies, marketers often prepare perceptual
positioning maps that show consumer
perceptions of their brands versus competing
products on important buying dimensions.

Above all else, a brand’s positioning must

serve the needs and preferences of well-
defined target markets.

Positioning maps show consumer perceptions of their

brands versus competing products on important
buying dimensions

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 Differentiation and Positioning
Map
Selecting an Overall Positioning Strategy

Value proposition is the full mix of benefits upon which a brand is

positioned

It is the answer to the customer’s question:

“Why should I buy your brand?”

BMW’s “ultimate driving machine” value proposition hinges on performance but

also includes luxury and styling, all for a price that is higher than average but
seems fair for this mix of benefits.

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 Differentiation and Positioning
Positioning Map
Selecting an Overall Positioning Strategy

The figure shows possible value

propositions on which a company might
position its products.

The five green cells represent winning

value propositions— differentiation and
positioning that gives the company a
competitive advantage.

The red cells, however, represent losing

value propositions.

The center yellow cell represents at best a

marginal proposition.

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 Questions
1. As a Marketing Consultant, you have been invited as guest speaker in a workshop for
female entrepreneurs organised by the National Women Entrepreneurs Council of
Ministry of Gender Equality and Family Welfare.

a. One of the participants asks you to advise her about the requirements for effective
segmentation. The audience is eager to hear your advice and since time is of essence
you will have to be brief. How would you go about it?
b. Another participant who produces pickles, asks you to explain the concept of
positioning for competitive advantage. What advice would you give her?

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 Questions
2. If you think that consumers are more prudent these days when it comes to spending on
high fashion clothing, you are far from the reality? Just look at the new children’s lines
from fashion houses such as Ralph Lauren, Young Versace, Gucci, Dolce & Gabbana,
Burberry etc. Toddler high fashion is not new, but designers are taking it to new levels
and extending it beyond special-occasion clothing to everyday wear. In the past, some of
the little girls marching down fashion runways carried dolls with matching outfits. But
today, many of the little children’s fashions are geared around matching mum’s and
dad’s clothing. Jennifer Lopez and her little ones helped Gucci launch a line for babies
and children aged 2 to 8 years old. A Gucci children’s outfit with a t-shirt, skinny jeans, a
belt with the trademark double-G, a raincoat, and boots will set mom and dad back
about $1,000. A Burberry children’s double-breasted trench coat for a baby runs $335, a
bargain compared to mom’s matching $1,195 trench coat. The CEO of the Young Versace
brand sees growth in this market and anticipates this brand making up 10 percent of the
company’s global sales in only a few years.
What segmentation variables are marketers using in this example?
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