Download What is Marketing?

Marketing: An Introduction
Second Canadian Edition
Armstrong, Kotler, Cunningham, Mitchell and Buchwitz
Chapter Seven
Segmentation, Targeting and
Positioning: Building the Right
Relationships with the Right
Customers
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Copyright © 2007 Pearson Education Canada
Looking Ahead
• Define the three steps of target marketing: market
segmentation, market targeting and market
positioning.
• List and discuss the major bases for segmenting
consumer and business markets.
• Explain how companies identify attractive market
segments and choose a target marketing
strategy.
• Discuss how companies position their products
for maximum competitive advantage in the
marketplace.
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Segmentation/Positioning
• Segment markets.
– Identify bases for segmentation.
– Develop segmentation profiles.
• Target segment(s).
– Measure of segment attractiveness.
– Select the target segment(s).
• Position for target segment(s).
– Develop positioning for each segment.
– Develop appropriate marketing mix.
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Segmentation Variables
• Geographic.
– Area, population density, climate etc.
• Demographic.
– Age, sex, lifecycle, income, job, etc
• Psychographic.
– Lifestyle, personality.
• Behavioural.
– Benefits sought, status, usage rate,
loyalty, attitudes, etc.
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Geographic Segmentation
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•
•
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World region or country.
Region of country.
City or metro size.
Density or climate.
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Demographic Segmentation
• Age, gender, family size, income,
occupation, etc.
• The most popular bases for segmenting
customer groups.
• Easier to measure than most other types
of variables.
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Demographic Segmentation
• Gender.
– Women make 90% of home improvement decisions.
– Women influence 80% of all household consumer
purchases.
• Income.
– Identifies and targets the affluent for luxury goods.
– People with low annual incomes can be a lucrative
market.
– Some manufacturers have different grades of
products for different markets.
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Demographic Segmentation
• Age and life-cycle.
– Do not necessarily match.
• Middle aged people starting new families.
• Seniors going back to university or college .
– Products targeted at age or life-cycle stages.
• P&G has different toothpastes for different age
groups.
– Avoid stereotypes in promotions.
– Promote positive messages.
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Psychographic Segmentation
• Dividing a market into different groups
based on:
– Social class.
– Lifestyle.
– Personality characteristics.
• Targeting whitening toothpaste at
psychographic segment who are active
and concerned about sexual
attractiveness.
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Behavioural Segmentation
• Occasions.
– Special promotions for holidays.
• (e.g., Hershey Kisses).
– Special products for special occasions.
• (e.g., Kodak disposable cameras).
• Benefits sought.
– Different segments desire different benefits
from products.
• e.g., P&G’s multiple brands of laundry detergents
to satisfy different needs in the product category.
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Behavioural Segmentation
• User status.
–
–
–
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Nonusers, ex-users.
Potential users.
First-time users.
Regular users.
• Loyalty status.
– Brands.
– Stores.
– Companies.
• Usage rate.
– Light.
– Medium.
– Heavy.
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Market Segmentation
• Best to use multiple approaches in order
to identify smaller, better-defined target
groups.
• Start with a single base and then expand
to other bases.
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Segmenting Business Markets
• Consumer and business markets use
many of the same variables for
segmentation.
• Business marketers can also use:
– Operating characteristics.
– Purchasing approaches.
– Situational factors.
– Personal characteristics.
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Segmenting International Markets
• Factors for segmenting foreign markets.
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Geographic location.
Economic situation.
Culture.
Political and legal situation and issues.
• Intermarket segmentation.
– When there is little difference across
international markets.
– Teenagers all over the world tend to be the
same.
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Evaluating Market Segments
• Segment size and growth.
– Analyze current segment sales, growth rates and
expected profitability.
• Segment structural attractiveness.
– Consider effects of: competitors, existence of
substitute products, the power of buyers/suppliers.
• Company objectives and resources.
– Examine company skills and resources needed to
succeed in that segment.
– Offer superior value/gain competitive advantage.
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Segment Success Criteria
• Measurable - Ability to measure
numerically.
• Accessible - Ability to reach segment.
• Substantial – Ability to support the
business.
• Differentiable – Ability to find unique
position in segment.
• Actionable – Ability to pursue and
capture the segment.
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Levels of Segmentation
• Mass marketing.
– No segments and single marketing mix.
• Differentiated marketing.
– Large segments with specific marketing mixes.
• Niche marketing.
– Small segments with specialized marketing
mixes.
• Micro-marketing.
– Customized marketing to individuals.
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Undifferentiated Marketing
• Focus is on common (not different)
needs of consumers.
• Product and marketing program are
geared to the largest number of buyers.
• Uses mass advertising and distribution.
• Henry Ford’s Model T excellent example
of undifferentiated or mass marketing.
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Differentiated Marketing
• Firm targets several market segments
and designs separate offers for each.
• The goal is to have higher sales and a
stronger position with each market
segment.
• This approach increases the costs of
doing business.
• General Motors claims to make a car for
every segment.
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Niche Marketing
• The focus is acquiring a large share of
one or a few segments of niches.
• Generally, there are fewer competitors.
• The Internet is ideal for targeting small
niche markets.
• There is some risk in focusing on only
one market.
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Micromarketing
• Tailoring products and marketing
programs to suit the tastes of specific
individuals and locations.
– Local Marketing: Tailoring brands and promotions
to the needs and wants of local customer groups—
cities, neighbourhoods, specific stores.
– Individual Marketing: Tailoring products and
marketing programs to the needs and preferences
of individual customers.
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Mass Customization
• The process of creating customerunique value by designing products and
services tailor-made to individual needs,
on a large scale.
• Having your next car or sneakers built to
order?
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Market Coverage Strategy
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Company resources.
Degree of product variability.
Product life cycle stage.
Market viability.
Competitors’ marketing strategies.
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Socially Responsible
Target Marketing
• Smart targeting helps both companies
and consumers.
• Target marketing sometimes generates
controversy and concern.
– Vulnerable and disadvantaged can be targeted.
– Cereal, cigarette, beer and fast-food marketers
have received criticism.
– Internet has raised fresh concerns about potential
targeting abuses.
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Successful Positioning
• Product position.
– How a product is viewed by consumers
relative to competing products.
• Three positioning steps.
– Identify competitive advantages on which to
build a differentiated position.
– Choose the right competitive differentiation.
– Select an overall positioning strategy.
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Gaining Competitive Advantage
• Key to winning target customers is to
understand their needs better than
competitors do and to deliver more
value.
• Competitive advantage – extent to
which a company can position itself as
providing superior value.
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Identifying Competitive
Advantage
• Product differentiation.
– Consistency, durability, reliability, reparability.
• Services differentiation.
– Speed, convenience, careful delivery.
• Image differentiation.
– Convey benefits and positioning.
• People differentiation.
– Hiring, training better people than competition
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Successful Differentiation
• Important – of value to consumers.
• Distinctive – obvious and clear.
• Superior – better value than
competitors.
• Communicable – explainable.
• Pre-emptive – defendable and unique.
• Affordable – delivers value for cost.
• Profitable – company can make
money.
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Positioning Errors
• Under-positioning.
– Failing to really position the company at
all.
• Over-positioning.
– Giving buyers too narrow a picture of the
company.
• Confused positioning.
– Leaving buyers with a confused image of a
company.
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Value Propositions
Price
Benefits
More
7-30
More
The same
Less
More
for
more
More
for the
same
More
for
less
The same
The same
for
less
Less
Less for
much
less
Copyright © 2007 Pearson Education Canada
Looking Back
• Define the three steps of target marketing:
market segmentation, market targeting and
market positioning.
• List and discuss the major bases for segmenting
consumer and business markets.
• Explain how companies identify attractive market
segments and choose a target marketing
strategy.
• Discuss how companies position their products
for maximum competitive advantage in the
marketplace.
7-32
Copyright © 2007 Pearson Education Canada