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PRINCIPLES OF MARKETING Market Segmentation, Targeting, and Positioning for Competitive Advantage Steps in STP 6. Develop Marketing Mix for Each Target Segment 5. Develop Positioning for Each Target Segment 4. Select Target Segment(s) 3. Develop Measures of Segment Attractiveness Market Positioning Market Targeting 2. Develop Profiles of Resulting Segments 1. Identify Bases for Segmenting the Market Market Segmentation Step 1. Market Segmentation 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) Local marketing Products to suit the tastes of individuals or locations (complete segmentation) Local marketing Products to suit the tastes of individuals or locations (complete segmentation) Local Marketing Individual Marketing Tailoring brands/ promotions to local customer groups, i.e Sears Tailoring products and programs to the needs of individual customers, i.e. Dell Step 1. Market Segmentation Bases for Segmenting Consumer Markets Geographic Nations, states, regions or cities Descriptive Demographic Age, gender, family size and life cycle, or income Psychographic Social class, lifestyle, or personality Behavioral Occasions, benefits, uses, or responses , attitude Age and Life-Cycle Segmentation P&G targets kids with Crest Kid’s Cavity Protection toothpaste. It’s gentle on tooth enamel and has “funfilled sparkles and sparkle fun flavor just for kids.” Psychographic Segmentation When Honda markets its ACTIVA , it appeals to the rebellious, independent women & girls. Using Multiple Segmentation Bases: Geodemographics Step 1. Market Segmentation Bases for Segmenting Business Markets Personal Characteristics Situational Factors Demographics Bases for Segmenting Business Markets Purchasing Approaches Operating Characteristics Step 1. Market Segmentation Bases for Segmenting International Markets Industrial Markets Geographic Cultural Economic Political/ Legal Intermarket 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. Interactive Student Assignment • Choose a partner and make a list of the market segments to which you belong. What segmentation variables did you take into consideration when you placed yourself into those segments? Step 2. Market Targeting 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. Step 2. Market Targeting Market Coverage Strategies Company Marketing Mix Market A. Undifferentiated Marketing Company Marketing Mix 1 Company Marketing Mix 2 Company Marketing Mix 3 Segment 1 Segment 2 Segment 3 B. Differentiated Marketing Company Marketing Mix Segment 1 Segment 2 Segment 3 C. Concentrated Marketing Step 2. Market Targeting Choosing a Market-Coverage Strategy Company Resources Product Variability Product’s Stage in the Product Life Cycle Market Variability Competitors’ Marketing Strategies Step 3. Positioning for Competitive Advantage • Positioning – the act of designing company offering & image to occupy distinctive place in the mind of target market • Points -of -difference (PODs) – Attributes or benefits consumers strongly associate with brand » E.g.- FedEx (overnight delivery), Nike (performance) • Points-of-parity (POPs) – Associations that are not necessarily unique to brand but may be shared with other brands Developing Competitive Differentiation Product Service Areas for Competitive Differentiation Personnel Image Identifying Possible Competitive Advantages Product Differentiation (e.g., consistency, durability, reliability, repairability) Image Differentiation Services Differentiation (e.g., speed, convenience, careful delivery) Channel Differentiation (e.g., convey benefits and positioning) People Differentiation (e.g., hiring, training better people than competitors) symbols media Image Atmosphere Events 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. Selecting the Right Competitive Advantages Important Profitable Affordable Preemptive Criteria for Determining Which Differences to Promote Distinctive Superior Communicable Positioning Errors • Under positioning: – Failing to really position the company at all. – E.g. • Over positioning: – Giving buyers too narrow a picture of the company. – E.g. • Confused Positioning: – Leaving buyers with a confused image of a company. – E.g. • Doubtful positioning: – Buyers may find hard to believe the brand claims in view of product features , price or manufacturer. – E.g. Step 3. Positioning for Competitive Advantage: Strategies Product Class Away from Competitors Product Attributes Benefits Offered G H C A Against a Competitor D E B F Users Usage Occasions