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Market segmentation 1 2 3 1 Market Segmentation Market Targeting Differentiation and Positioning © 2012 Principles of Marketing: An Asian Perspective 1 1 Market Segmentation Segmentation, Targeting, Positioning and Differentiation 2 • Segmentation: Identify and describe market segments • Targeting: Evaluate segments and decide which one to pursue • Positioning: Design a product and marketing mix to meet the segment’s needs • Differentiation: Differentiate the firm’s market offering to create superior customer value • Positioning: A market offering occupying a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. © 2012 Principles of Marketing: An Asian Perspective 2 1 Market Segmentation Segmentation Through market segmentation, companies divide large, heterogeneous markets into smaller segments that can be reached more efficiently and effectively with products and services that match their unique needs. 3 © 2012 Principles of Marketing: An Asian Perspective 3 1 Market Segmentation Segmenting Consumer Markets 4 Geographic segmentation Demographic segmentation Psychographic segmentation Behavioral segmentation © 2012 Principles of Marketing: An Asian Perspective 4 1 Market Segmentation Segmenting Consumer Markets 5 © 2012 Principles of Marketing: An Asian Perspective 5 1 Market Segmentation Segmenting Consumer Markets 6 © 2012 Principles of Marketing: An Asian Perspective 6 1 Market Segmentation Geographic segmentation 7 • Geographic segmentation divides the market into different geographical units such as nations, regions, states, counties, or cities • Many companies localize their products, advertising, promotion, and sales efforts to fit the needs of individual regions and cities. © 2012 Principles of Marketing: An Asian Perspective 7 1 Market Segmentation Demographic segmentation Divides the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race, generation, and nationality. Demographic factors are the most popular bases for segmenting customer groups. 8 © 2012 Principles of Marketing: An Asian Perspective 8 1 Market Segmentation Age and Life-Cycle Segmentation 9 • Consumer needs and wants change with age. • Some companies use age and life-cycle segmentation, offering different products or using different marketing approaches for different age and life-cycle groups. © 2012 Principles of Marketing: An Asian Perspective 9 1 Market Segmentation Gender Segmentation Nike has stepped up its efforts to capture the women’s sport apparel market by overhauling its women’s apparel lines, revamping the Nikewomen.com Web site, and opening Nikewomen stores in several major cities. (www.Nikewomen.co m) 10 © 2012 Principles of Marketing: An Asian Perspective 10 1 Market Segmentation Income Segmentation Income segmentation has long been used by the marketers of products and services such as automobiles, clothing, cosmetics, financial services, and travel Credit card companies offer different types of cards with different perks depending on income level. 11 © 2012 Principles of Marketing: An Asian Perspective 11 1 Market Segmentation Psychographics Segmentation • Psychographic segmentation divides buyers into different groups based on social class, lifestyle, or personality characteristics. • Marketers also use personality variables to segment markets. 12 © 2012 Principles of Marketing: An Asian Perspective 12 1 Market Segmentation Behavioral Segmentation Occasion segmentation means grouping buyers according to occasions when they get the idea to buy, actually make their purchase, or use the purchased item. Benefit segmentation means grouping buyers according to the different benefits that they seek from the product. 13 © 2012 Principles of Marketing: An Asian Perspective 13 1 Market Segmentation Occasion Segmentation Indofood, the world’s largest instant noodle maker by volume, practices occasion segmentation to create “aspirational noodle eaters.” It promoted a special edition Valentine’s Day box noodle set packed in a pink Chinese takeaway box with cartoon hearts for decoration. There are also “limited edition” Chinese New Year noodles, packed in auspicious red and gold; birthday noodles; and noodles for book launches. Indofood envisages using other occasions like weddings, births, and college graduations to market its products. 14 © 2012 Principles of Marketing: An Asian Perspective 14 1 Market Segmentation Behavioral Segmentation User Status means segmenting markets into nonusers, ex-users, potential users, first-time users, and regular users of a product. Usage Rate means grouping markets into light, medium, and heavy product users. Loyalty Status means dividing buyers into groups according to their degree of loyalty. 15 Presentation Title runs here l 00/00/00 15 1 Market Segmentation Measurable: The size, purchasing power, and profiles of the segments can be measured. Substantial: The market segments are large or profitable enough to serve. Accessible: The market segments can be effectively reached and served. Actionable: Effective programs can be designed for attracting and serving the segments. Differentiable: The segments are conceptually distinguishable and respond differently to different marketing mix elements and programs. 16 © 2012 Principles of Marketing: An Asian Perspective 16 2 Market Targeting Evaluating Market Segments In evaluating different market segments, a firm must look at three factors: Segment size and growth Segment structural attractiveness Company objectives and resources The largest, fastest-growing segments are not always the most attractive ones for every company. 17 © 2012 Principles of Marketing: An Asian Perspective 17 2 Market Targeting Segment Structural Attractiveness • • • • • The company also needs to examine major structural factors that affect long-run segment attractiveness. A segment is less attractive if it already contains many strong and aggressive competitors. The existence of many actual or potential substitute products may limit prices and the profits. The relative power of buyers also affects segment attractiveness. A segment may be less attractive if it contains powerful suppliers who can control prices. 18 © 2012 Principles of Marketing: An Asian Perspective 18 2 Market Targeting Target market A target market consists of a set of buyers who share common needs or characteristics that the company decides to serve. 19 © 2012 Principles of Marketing: An Asian Perspective 19 2 Market Targeting Target Marketing Strategies 20 © 2012 Principles of Marketing: An Asian Perspective 20 2 Market Targeting Segmentation strategies Undifferentiated MARKETING MIX 21 © 2012 Principles of Marketing: An Asian Perspective All buyers in 1 segment 21 2 Market Targeting Undifferentiated Marketing •Using an undifferentiated marketing (or mass-marketing) strategy, a firm might decide to ignore market segment differences and target the whole market with one offer. •This mass-marketing strategy focuses on what is common in the needs of consumers rather than on what is different. 22 © 2012 Principles of Marketing: An Asian Perspective 22 2 Market Targeting Segmentation strategies : Differentiated MARKETING MIX 1 Segment 1 MARKETING MIX 2 Segment 2 MARKETING MIX 3 Segment 3 MARKETING MIX 4 Segment 4 23 © 2012 Principles of Marketing: An Asian Perspective 23 2 Market Targeting Differentiated Marketing Using a differentiated marketing (or segmented marketing) strategy, a firm decides to target several market segments and designs separate offers for each. 24 © 2012 Principles of Marketing: An Asian Perspective 24 2 Market Targeting Differentiated Marketing Toyota practices differentiated marketing by offering different car models for different consumer segments. 25 © 2012 Principles of Marketing: An Asian Perspective 25 2 Market Targeting Segmentation strategies Concentrated MARKETING MIX 26 © 2012 Principles of Marketing: An Asian Perspective Segment 1 26 2 Market Targeting Concentrated Marketing •Using a concentrated marketing (or niche marketing) strategy, instead of going after a small share of a large market, the firm goes after a large share of one or a few smaller segments or niches. •It can market more effectively by fine-tuning its products, prices, and programs to the needs of carefully defined segments. •It can market more efficiently, targeting its products or services, channels, and communications programs toward only consumers that it can serve best and most profitably 27 © 2012 Principles of Marketing: An Asian Perspective 27 2 Market Targeting Micro Marketing •Micromarketing is the practice of tailoring products and marketing programs to suit the tastes of specific individuals and locations. •Micromarketing includes local marketing and individual marketing Local Marketing Local marketing involves tailoring brands and promotions to the needs and wants of local customer groups—cities, neighborhoods, and even specific stores 28 2 Market Targeting Drawbacks of Local Marketing Local marketing has drawbacks : a)It can drive up manufacturing and marketing costs by reducing economies of scale. b)It can create logistics problems. c)The brand’s overall image might be diluted if the product and message vary too much in different localities. 29 2 Market Targeting Individual Marketing •Individual marketing is the tailoring of products and marketing programs to the needs and preferences of individual customers. •Individual marketing has also been labeled one-to-one marketing, mass customization, and markets-of-one marketing. 30 2 Market Targeting Mass Production versus Individual and Self-Marketing 31 2 Market Targeting Target Strategy 32 2 Market Targeting Socially Responsible Target Marketing •Target marketing sometimes generates controversy and concern. Issues usually involve the targeting of vulnerable or disadvantaged consumers with controversial or potentially harmful products. •Marketers of a wide range of industries have been criticized for their marketing efforts directed toward children. •Problems arise when marketing adult products to kids, whether intentionally or unintentionally. 33 2 Market Targeting Socially Responsible Target Marketing •The growth of the Internet and other carefully targeted direct media has raised new concerns about potential targeting abuses. •The issue is not so much who is targeted, but how and for what. Controversies arise when marketers attempt to profit by unfairly targeting vulnerable segments or target them with questionable products or tactics. •Socially responsible marketing calls for segmentation and targeting that serve not just the interests of the company, but also the interests of those targeted. 34 3 Differentiation and Positioning Differentiation and Positioning Value proposition: How a company will create differentiated value for targeted segments and what positions it wants to occupy in those segments. A product’s position is the way the product is defined by consumers on important attributes. 35 © 2012 Principles of Marketing: An Asian Perspective 35 3 Differentiation and Positioning Positioning Map Perceptual positioning maps show consumer perceptions of their brands versus competing products on important buying dimensions. 36 © 2012 Principles of Marketing: An Asian Perspective 36 3 Differentiation and Positioning Choosing a differentiation and positioning Strategy IDENTIFY COMPETITIVE ADVANTAGES CHOOSE RIGHT COMPETITIVE ADVANTAGE SELECT POSITIONING STRATEGY 37 © 2012 Principles of Marketing: An Asian Perspective 37 3 Differentiation and Positioning Identifying Possible Value Differences and Competitive Advantages • To the extent that a company can differentiate and position itself as providing superior customer value, it gains competitive advantage. • It can differentiate along the lines of product, service, channel, people, or image. 38 © 2012 Principles of Marketing: An Asian Perspective 38 3 Differentiation and Positioning Differentiation based on: PRODUCT DISTRIBUTION SERVICES PEOPLE 39 © 2012 Principles of Marketing: An Asian Perspective IMAGE 39 3 Differentiation and Positioning Choosing the Right Competitive Advantages 1. How Many Differences to Promote? 2. Which Differences to Promote? 40 © 2012 Principles of Marketing: An Asian Perspective 40 3 Differentiation and Positioning How Many Differences To Promote? • Ad man Rosser Reeves believes a company should develop a unique selling proposition (USP) for each brand and stick to it. • Other marketers think that companies should position themselves on more than one differentiator. 41 © 2012 Principles of Marketing: An Asian Perspective 41 3 Differentiation and Positioning Unique Selling Proposition Ariel detergent in India appeals to more segments by offering superior cleaning performance as well as fragrance. 42 © 2012 Principles of Marketing: An Asian Perspective 42 3 Differentiation and Positioning Which Differences to Promote – Important Criteria: 1. 2. 3. 4. 5. 6. 7. Important: The difference delivers a highly valued benefit to target buyers. Distinctive: Competitors do not offer the difference, or the company can offer it in a more distinctive way. Superior: The difference is superior to other ways that customers might obtain the same benefit. Communicable: The difference is communicable and visible to buyers. Preemptive: Competitors cannot easily copy the difference. Affordable: Buyers can afford to pay for the difference. Profitable: The company can introduce the difference profitably 43 © 2012 Principles of Marketing: An Asian Perspective 43 3 Differentiation and Positioning Value proposition Possible Value Propositions 44 © 2012 Principles of Marketing: An Asian Perspective 44 3 Differentiation and Positioning Value proposition 1. More for More positioning involves providing the most upscale product or service and charging a higher price to cover the higher costs. 2. More for the Same positioning involves introducing a brand offering comparable quality but at a lower price. 3. The Same for Less positioning can be a powerful value proposition—everyone likes a good deal. 45 © 2012 Principles of Marketing: An Asian Perspective 45 3 Differentiation and Positioning Value propositions 4. Less for Much Less positioning is offering products that offer less and therefore cost less. “Less for much less” positioning involves meeting consumers’ lower performance or quality requirements at a much lower price. 5. More for Less positioning is the winning value proposition. In the long run, companies will find it very difficult to sustain such best-of-both positioning. 46 © 2012 Principles of Marketing: An Asian Perspective 46 3 Differentiation and Positioning Developing a positioning statement • • Company and brand positioning should be summed up in a positioning statement. The statement should follow the form: To (target segment and need) our (brand) is (concept) that (point of difference). Example: “To busy, mobile people who need to always be in the loop, the iPad is a multi-touch screen wireless connectivity solution that provides the best way to experience the Web, email, photos, and videos with just the touch of a finger.” 47 © 2012 Principles of Marketing: An Asian Perspective 47 3 Differentiation and Positioning Communicating and Delivering the Chosen Position • Once it has chosen a position, the company must take strong steps to deliver and communicate the desired position to target consumers. • All the company’s marketing mix efforts must support the positioning strategy. 48 © 2012 Principles of Marketing: An Asian Perspective 48 3 Differentiation and Positioning Communicating and Delivering the Chosen Position • Positioning the company calls for concrete action. If the company decides to build a position on better quality and service, it must first deliver that position. • Designing the marketing mix—product, price, place, and promotion— involves working out the tactical details of the positioning strategy 49 © 2012 Principles of Marketing: An Asian Perspective 49 3 Differentiation and Positioning A company’s marketing mix efforts must support the positioning strategy 50 © 2012 Principles of Marketing: An Asian Perspective 50