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CHAPTER THREE
Focusing Marketing
Strategy with
Segmentation and
Positioning
For use only with
Perreault and McCarthy
texts.
© 2005 McGraw-Hill
Companies, Inc.
McGraw-Hill/Irwin
www.mhhe.com/fourps
When we finish this lecture you should
1. Know about defining generic markets and
product-markets.
2. Know what market segmentation is and how
to segment product-markets into submarkets.
3. Know three approaches to market-oriented
strategy planning.
4. Know dimensions that may be useful for
segmenting markets.
5. Know a seven-step approach to market
segmentation that you can do yourself.
6. Know what positioning is--and why it is
useful.
© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Taking Advantage of Opportunities
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© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Exhibit 3-2
Search for Opportunities Can Begin by Understanding Markets
Selecting
target
marketing
approach
Narrowing down to
specific product-market
All
customer
needs
Some
generic
market
One
broad
productmarket
Segmenting
into possible
target markets
Single
target
market
approach
Homogeneous
(narrow)
productmarkets
Multiple
target
market
approach
Combined
target
market
approach
© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Naming Product Markets and Generic Markets
Customer
Needs
Product Type
Product-Market
Definition
Geographic
Area
Customer Type
No Product Type in Generic Market Definition
© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Interactive Exercise: Product-Market Definition
© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
What Is the Product-Market?
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Exhibit 3-3
Market Segmentation Defines Possible Target Markets
Broad product-market (or generic market) name
goes here (The bicycle-riders product-market)
Submarket 1
(Exercisers)
Submarket 2
(Off-road
adventurers)
Submarket 3
(Transportation riders)
Submarket 4
(Socializers)
Submarket 5
(Environmentalists)
© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Exhibit 3-4
How Far Should the Aggregating Go?
Status dimension
B. Product-market showing
A.
six segments
three
segments
Dependability dimension
© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Exhibit 3-5
Target Marketers Aim at Specific Targets
In a product-market area
A segmenter
Using single target
market approach –
can aim at one
submarket with one
marketing mix
Using multiple target
market approach – can
aim at two or more
submarkets with different
marketing mixes
© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
A combiner
Using combined target
market approach –
can aim at two or more
submarkets with the
same marketing mix
Segmenting vs. Combining
Profit Is the
Balancing
Point
Combiners
Try to Satisfy
“Pretty Well”
Too Much
Combining Is
Risky
Key
Issues
Segment or
Combine?
Segmenting
May Produce
Bigger Sales
© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Segmenters
Try to Satisfy
“Very Well”
What Dimensions Are Used to Segment Markets?
Qualifying
Dimensions
Determining
Dimensions
• Relevant to
including a
customer type in a
product market
• Help identify “core
features”
OR
• Affect the
customer’s
purchase of a
product or brand
• Can be further
segmented
© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
What Are the Relevant Segmenting Dimensions?
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Determining vs. Qualifying Dimensions
Determining
Dimensions May
Be Very Specific
Determining
Dimensions May
Change
Key Issues
Different
Dimensions For
Different
Submarkets
Qualifying
Dimensions Are
Important Too
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Broader Issues in Selecting
Segmenting Dimensions
Ethical
Issues
Exploitation
Creates
Unnecessary
Wants
Does Harm
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What Dimensions Are Used to Segment Markets?
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© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
What Dimensions Are Used to Segment Markets?
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© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Segmentation and Advertising
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What Dimensions Are Used to Segment Markets?
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Business-to-Business Segmentation
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Segmenting Product Markets
Name Broad
Product-Market
List Customer Needs
Form Homogeneous
Submarkets
Identify
Determining Dimensions
Process
for
Segmenting
Product-Markets
Name Possible
Product-Markets
Evaluate Product-Market
Segments
Estimate Size of
Product-Market Segments
© 2004 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
More Sophisticated Techniques
May Help in Segmenting
Clustering
Customer Database
Customer Relationship
Management (CRM)
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Cluster Analysis
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Positioning
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Exhibit 3-12
An Example of Positioning
High moisturizing
4
7
Tone
Zest
Lever 2000
Dove
5
Nondeodorant
2
Lux
Coast
Safeguard
8
Deodorant
3
1
Dial
Lifebuoy
Lava
6
low moisturizing
© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Key Terms
• Market
• Generic market
• Product market
• Market segmentation
• Segmenting
• Market segment
• Single target market
•
•
approach
Multiple target market
approach
Combined target
market approach
• Combiners
• Segmenters
• Qualifying dimensions
• Determining dimensions
• Clustering techniques
• Customer relationship
•
management (CRM)
Positioning
© 2005 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin