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6 Segmentation, Targeting, and Positioning: Building the Right Relationships with the Right Customers Steps in Market Segmentation, Targeting, and Positioning 6-2 Market Segmentation Geographic World Region or Country Region of Country City or Metro Size 6-3 Market Segmentation Demographic Segmentation • Dividing the market into groups based on variables such as: – – – – – – – – – Age Life-cycle stage or family size Gender Income Occupation Education Religion Race Nationality 6-4 Market Segmentation Age and Life-Cycle Stage • P&G has different toothpastes for different age groups. • Avoid stereotypes in promotions. • Promote positive messages. 6-5 Market Segmentation Gender • Women make 90% of home improvement decisions. • Women influence 80% of all household consumer purchases. 6-6 Market Segmentation Income • Identifies and targets the affluent for luxury goods. • People with _____ annual incomes can be a lucrative market. • Some manufacturers have different grades of products for different markets. 6-7 Market Segmentation Psychographic Social Class Personality 6-8 Psychographic Segmentation When Honda markets its Reflex and Elite scooters, it appeals to the rebellious, independent kid in all of us. 6-9 Market Segmentation Behavioral • Occasions: – Special promotions and labels for holidays. – Special products for special occasions. 6-10 Market Segmentation Behavioral • Benefits Sought: – Different segments desire different benefits from products. 6-11 Market Segmentation • User Status: Behavioral • Usage Rate: – Nonusers, ex-users – Potential users – First-time users – Regular users – Light – Medium – Heavy 6-12 Market Segmentation Behavioral • Loyalty Status: – Brands – Stores – Companies 6-13 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. 6-14 Geodemographic Segmentation • Claritas, Inc. • Potential Rating Index for • • • Zip Markets (PRIZM) Based on U.S. Census data Profiles on 260,000 U.S. neighborhoods 62 clusters or types 6-15 Segmenting International Markets Factors Used: Geographic Location Economic Factors Political and Legal Factors 6-16 Intermarket Segmentation Teens show surprising similarity no matter where in the world they live. For instance, this teen could live almost anywhere. Thus, many companies target teenagers with worldwide marketing campaigns. 6-17 Market Segmentation Requirements for Effective Segmentation • Size, purchasing power, profiles of segments can be measured. Accessible • Segments can be effectively reached and served. Substantial • Segments are large or profitable enough to serve. • Segments must respond differently to different marketing mix elements & programs. Actionable • Effective programs can be designed to attract and serve the segments. 6-18 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, and the power of buyers & suppliers. • Company Objectives and Resources – Examine company skills & resources needed to succeed in that segment. – Offer superior value and gain advantages over competitors. 6-19 Target Marketing Strategies 6-20 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. 6-21 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. 6-22 Concentrated 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. 6-23 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, neighborhoods, specific stores. – Individual Marketing: Tailoring products and marketing programs to the needs and preferences of individual customers. 6-24 Choosing a Market Coverage Strategy Factors to Consider: Company Resources Product Variability Product’s Life-Cycle Stage Market Variability Competitors’ Marketing Strategies 6-25 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. 6-26 Positioning for Competitive Advantage • Product’s position is the way the product is defined by consumers on important attributes. • The place the product occupies in consumers’ minds relative to competing products. 6-27 Choosing a Positioning Strategy #1 Identify a set of possible competitive advantages on which to build a position #2 Choose the right competitive advantages #3 Select an overall positioning strategy 6-28 Identifying Possible Competitive Advantages • 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. 6-29 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) 6-30 Positioning Errors • Underpositioning: • Overpositioning: – Giving buyers too narrow a picture of the company. • Confused Positioning: – Leaving buyers with a confused image of a company. 6-31 Choosing Right Competitive Advantages Important Distinctive Affordable Superior Preemptive 6-32 Possible Value Propositions 6-33 Value Proposition “Much more for much more” value proposition: HäagenDazs offers its superpremium ice cream at a price never before charged. 6-34 Communicating and Delivering the Chosen Position • Company must take strong steps to deliver and communicate the desired position to target consumers. • The marketing mix efforts must support the positioning strategy. • Must monitor and adapt the position over time to match changes in consumer needs and competitors’ strategies. 6-35