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Chapter 4
Marketing Segmentation, Target
Marketing & Positioning
Market Strategy
Primary role of placing the firm in an optimal
position with respect to customer needs.
Market Segmentation
Decisions related to targeting the entire market
for a product or one or more segments of the
total market
This information to make these decisions should
come from the “situation analysis” specifically
the analysis of the customer environment!
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Market Segmentation
Traditional approaches to market segmentation
include:
– mass marketing
– differentiated marketing
– niche marketing
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What are some of the key benefits
of market segmentation?
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Mass Marketing...
Aimed at the total market for a particular
product
– undifferentiated marketing
– assumes all customers have similar needs
– single marketing mix
• 1 product @ 1 price
• 1 promotional program
• 1 distribution system
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What products are mass
marketed?
For example...
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Differentiated Marketing
Dividing the total market into groups
common needs & attempting to develop a marketing
mix that appeals to 1 or more of these groups
May be necessary when needs are similar within a
group, but differ across groups
Involves two options:
– multisegment approach
– market concentration approach
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What products are mass
marketed?
...
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Niche Marketing...
Narrow the market concentration approach even
more
– focus on a small market
– segment has a unique, specific set of needs
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Individualized Approaches to
Market Segmentation
Resulting from advances in technology
(communications & the Internet)
Occur as companies are able to track customers
Allow firms to combine demographic data with
information on past & current purchasing
behavior (marketing mix variables can match
customer’s needs, wants & preferences)
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One-to-One Marketing
Involves the creation of an entirely unique
marketing mix for each customer in
the target segment
More common in business than
consumer marketing
However, a fast growing approach
in
luxury & custom-made products
as well as services
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Mass Customization
Provides unique products & solutions to
individual customers on a mass scale
Is more cost effective and practical because
of advances in supply chain management,
just-in-time inventory control & electronic data
exhange
Often is used in business marketing
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Permission Marketing
A one-to-one technique whereby customers give
companies permission to specifically target them
in their marketing efforts
Is commonly executed through opt-in e-mail lists,
where a customer gives permission to send emails regarding products & services
Customers who opt-in are
already interested in the
goods & services
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Consumer Needs vs. Wants...
What is the difference between needs &
wants?
Are most products & services marketed to
consumers based on needs or wants?
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Three general categories that can be
used to divide marketsstate of being segmentation
– using demographic factors (age, gender, income &
education)
state of mind segmentation
– deals with how consumers think & feel
benefits sought
– wants
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The Role of Differentiation &
Positioning
Involves the development & maintenance of a
relative perception for a product in customers’ minds
– the goal is to create a favorable image versus all
competing products
Perceptions are fundamentally based on brand
image & experience
Requires attention to product descriptions, customer
support services & image
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USING PRODUCT DESCRIPTORS TO
DIFFERENTIATE AND POSITION A PRODUCT
Product
Features
Advantages
Benefits
Dell Inspiron 5000e
laptop computer
850-MHz Pentium III
Blazingly fast
Applications run faster
Weighs 6.75 lb
Lightweight
Greater mobility
240-HP engine
Speed and Power
Better self-image
WideTrack design
Excellent handling
Safety
Pontiac Gran Prix GTP
automobile
Fun to drive
Crest MultiCare
Advanced Cleaning
Toothpaste
Dissolving microcleansing crystals
Teeth stay cleaner
longer
Fresher breath
Bounty Extra Paper
Towels
20% larger sheets
Superior absorbency
Handles bigger messes
More sheets per roll
Won’t run out as often
Fewer buying trips
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Considerations in Business
Marketing
Requires an understanding of:
–
–
–
–
the role of the buying center
the nature of hard & soft costs
reciprocity
mutual dependence
Must build client relationships
Requires a firm to closely align their buying &
selling operations to identify & remove an
inefficiencies in the process
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