7-1

PRINCIPLES OF MARKETING

Chapter 7
Market Segmentation,
Targeting, and Positioning
for Competitive Advantage
 Copyright 1999 Prentice Hall
Steps in Segmentation, 7-2

Targeting, and Positioning

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

 Copyright 1999 Prentice Hall

Step 1. Market Segmentation 7-3

Levels of Market Segmentation

Mass Marketing
Same product to all consumers
(no segmentation)

Segment Marketing
Different products to one or more segments
(some segmentation)

Niche Marketing
Different products to subgroups within segments
( more segmentation)

Micromarketing
Products to suit the tastes of individuals or locations
(complete segmentation)

 Copyright 1999 Prentice Hall

Step 1. Market Segmentation 7-4

Bases for Segmenting Consumer Markets

Geographic
Nations, states,
regions or cities

Demographic
Age, gender,
family size and
life cycle, or
income
Psychographic
Social class, lifestyle,
or personality

Behavioral
Occasions, benefits,
uses, or responses

 Copyright 1999 Prentice Hall

 7-5
Using Multiple Segmentation
Bases: Geodemographics

 Copyright 1999 Prentice Hall

Step 1. Market Segmentation 7-6

Bases for Segmenting Business Markets

Personal Demographics
Characteristics

Bases
for Segmenting
Situational Business Operating
Factors Markets Characteristics

Purchasing
Approaches

 Copyright 1999 Prentice Hall

Step 1. Market Segmentation 7-7

Bases for Segmenting International Markets

Industrial Markets

Political/
Geographic Economic
Legal

Cultural Intermarket

 Copyright 1999 Prentice Hall

 7-8
Step 1. Market Segmentation
Requirements for Effective Segmentation

Measurable • Size, purchasing power, profiles

of segments can be measured.

Accessible • Segments must be effectively

reached and served.

Substantial • Segments must be large or

profitable enough to serve.

Differential • Segments must respond

differently to different marketing
mix elements & actions.

Actionable • Must be able to attract and serve

the segments.

 Copyright 1999 Prentice Hall

Step 2. Market Targeting 7-9

Evaluating Market Segments

• Segment Size and Growth

– Analyze sales, growth rates and expected profitability.

• 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.

 Copyright 1999 Prentice Hall

Step 2. Market Targeting 7-10

Market Coverage Strategies

Company
Marketing Market
Mix

A. Undifferentiated Marketing
Company
Marketing Mix 1 Segment 1
Company
Segment 2
Marketing Mix 2
Company
Segment 3
Marketing Mix 3
B. Differentiated Marketing

Segment 1
Company
Marketing Segment 2
Mix
Segment 3

C. Concentrated Marketing
 Copyright 1999 Prentice Hall
Step 2. Market Targeting 7-11

Choosing a Market-Coverage Strategy

Company
Resources

Product
Variability

Product’s Stage
in the Product Life Cycle

Market
Variability

Competitors’
Marketing Strategies
 Copyright 1999 Prentice Hall
Step 3. Positioning for Competitive 7-12

Advantage

• Product’s Position - the place the product

occupies in consumers’ minds relative to
competing products; i.e. Volvo positions
on “safety”.

• Marketers must:
– Plan positions to give products the greatest advantage
– Develop marketing mixes to create planned positions

 Copyright 1999 Prentice Hall

 7-13
Step 3. Positioning for Competitive
Advantage: Strategies

Product Product
Class Attributes

Away from Benefits

Competitors H
G
Offered
C

D
Against a E
B
Usage
F
Competitor Occasions

Users

 Copyright 1999 Prentice Hall

 7-14
Steps to Choosing and Implementing
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 adn

delivering the chosen position to the
market.
 Copyright 1999 Prentice Hall
Developing Competitive 7-15

Differentiation
Product Service

Areas for Competitive

Differentiation

Personnel Image

 Copyright 1999 Prentice Hall

Selecting the Right Competitive 7-16

Advantages

Important

Profitable Criteria Distinctive

for
Determining
Which
Differences
Affordable to Superior
Promote

Preemptive Communicable

 Copyright 1999 Prentice Hall