Marketing Strategy Course Contents
SECTION ONE
Introduction to Strategy
1. Market-Oriented Perspectives Underlie
Successful Corporate, Business, and
Marketing Strategies
2. Corporate Strategy Decisions and Their
Marketing Implications
3. Business Strategies and Their Marketing
Implications
SECTION TWO
Opportunity Analysis
4. Understanding Market Opportunities
5. Measuring Market Opportunities:
Forecasting and Market Knowledge
6. Targeting Attractive Market Segments
7. Differentiation and Brand Positioning
SECTION THREE
Formulating Marketing Strategies
8. Marketing Strategies for New Market
Entries
9. Strategies for Growth Markets
10. Strategies for Mature and Declining
Markets
11. Marketing Strategies for a Digitally
Networked World
SECTION FOUR
Implementation and Control
12. Organizing and Planning for Effective
Implementation
13. Measuring and Delivering Marketing
Performance
 Lecture 11 - 12
Targeting Attractive
Market Segments
Lecture Preview
• In this lecture, I am going to draw on the foundation of market knowledge and customer
understanding that I have established in the first five lectures to introduce what are probably
the most important and fundamental tools in the marketer’s tool kit: market segmentation and
target marketing.
• Together with differentiation and brand positioning, which I will address in the next lecture,
these tools provide the platform on which most effective marketing programs are built.
• But you must understand that learning to apply these tools effectively, however, requires
addressing several important questions.
1. Why do market segmentation and target marketing make sense?
2. Why not sell the same fitness services—or bank accounts, automobiles, or
whatever to everyone?
3. How can potentially attractive market segments be identified and defined?
4. Finally, how can these segments be prioritized so that the most attractive ones are
pursued?
• Answering these questions should enable an entrepreneur, a venture capital investor in all areas
and anywhere, or a marketing manager in a multinational firm to decide which market
segments should be targeted and provide insight into which investments should be made.

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DO MARKET SEGMENTATION AND TARGET MARKETING MAKE SENSE IN TODAY’S GLOBAL ECONOMY?

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Decision Processes

• Market segmentation
• a market is divided into distinct subsets of customers with similar needs and characteristics that lead
them to respond in similar ways to a particular product offering and marketing program.

• Target marketing
Evaluating the relative attractiveness of various segments in terms of:
• Market potential, growth rate, competitive intensity, and other factors, along with the firm’s mission and
capabilities to deliver what each segment wants, in order to choose which segments it will serve.

• Positioning
• Brand positioning - Designing product offerings and marketing programs that can establish an
enduring competitive advantage in the target market by creating a unique brand image, or position, in
the customer’s mind.

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Most Markets are Heterogeneous

• Variation among market segments affect the

differences and response rates
• Product preferences
• Size and growth in:
• Demand, media habits, and competitive structures.
• Markets - Complex entities that can be
defined in a variety of ways

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Importance of Market Segmentation

• Population growth has slowed and more

product markets are maturing
• Social and economic forces have produced
customers with more varied and sophisticated
needs
• Increasing importance toward
microsegmentation
• Implementing sharply focused marketing
programs
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Steps in the Market Segmentation Process

1. Identify a homogeneous segment that differs

from other segments
2. Specify criteria that define the segment
3. Determine segment size and potential

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How are Market Segments Best Defined?

• Segmentation decisions are based on:

• Who the customers are?
• Where they are?
• How they behave?

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Demographic Segmentation

• Common attributes
• Age
• Sex
• Income
• Occupation
• Education
• Race and ethnic origin

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11
Demographic Segmentation

• Industrial market segmentation

• Macrosegmentation
• Microsegmentation

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Geographic Segmentation

• Trade area: Area within a geographically

defined region
• Geodemographic segmentation
• Involves both demographic and geographic factors

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Behavioral Segmentation

• Consumer needs
• Customer needs are expressed in benefits sought from a particular product or service.
• Choice criteria: Consumers evaluate product or brand alternative on the basis of desired
characteristics.

• Product usage and purchase influence

• Importance of product usage
• In many markets a small proportion of potential customers makes a high percentage of all purchases.
• Market segmentation based on sources of purchase influence for the product category is relevant for both
consumer and organizational markets.

• Lifestyle
• Segmentation by lifestyle, or psychographics, segments markets on the basis of consumers’ activities,
interests, and opinions—what they do or believe.

• Organizational behavioral attributes

• Purchasing structure: Degree to which the purchasing activity is centralized.
• Buying situation: Three distinct types of situations
• Straight rebuy - Recurring situation handled on a routine basis.
• Modified rebuy - Occurs when some element has changed in a client–supplier relationship.
• New buying situation - Requires the gathering of considerable information and an evaluation of alternative suppliers.
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Innovative Segmentation

• Uses combination of different attributes to

precisely target an attractive segment

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Exhibit 6.7 - Steps in Constructing a Market
Attractiveness/Competitive Position Matrix for Evaluating
Potential Target Markets

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Exhibit 6.8 - Factors Underlying Market
Attractiveness and Competitive Position

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Exhibit 6.8 - Factors Underlying Market
Attractiveness and Competitive Position

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Exhibit 6.10 - Market
Attractiveness/Competitive-Position Matrix

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Exhibit 6.11 - Implications of Alternative Positions
within the Market-Attractiveness/Competitive-Position
Matrix

Sources: Adapted from George S. Day, Analysis for Strategic Market Decisions (St. Paul: West, 1986), p. 204; and S. J. Robinson, R. E.
Hitchens, and D. P. Wade, “The Directional Policy Matrix: Tool for Strategic Planning,” Long Range Planning 11 (1978), pp. 8–15.

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Niche-Market Strategy

• Serves one or more segments with sufficient

number of customers seeking specialized
benefits
• Designed to avoid direct competition with
larger firms

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Mass-Market Strategy

• Captures sufficient volume to gain economies

of scale and a cost advantage
• Requires:
• Substantial resources
• Production capacity
• Good mass-marketing capabilities
Differentiated marketing: Design separate products
and marketing programs for differing segments

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Growth-Market Strategy

• Targets one or more fast-growth segments

• Favored by smaller companies to avoid direct
confrontations
• Requires strong R&D and marketing
capabilities

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Global Market Segmentation

• Traditional approach - View a country as a

single segment comprising all consumers
• Is flawed
• Intercountry segmentation enables a company
to develop reasonably standardized programs

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