chapter six segmentation, targeting, and positioning: building the right relationships with the...

Chapter Six

Segmentation, Targeting, and Positioning:

Building the Right Relationships with the Right Customers

Copyright 2007, Prentice Hall, Inc. 6-2

Roadmap: Previewing the Concepts

1. Define the three steps of target marketing: market segmentation, market targeting, and market positioning.

2. List and discuss the major bases for segmenting consumer and business markets.

3. Explain how companies identify attractive market segments and choose a target marketing strategy.

4. Discuss how companies position their products for maximum competitive advantage in the marketplace.


Strategy Sells multiple brands

within the same product category for detergents, soaps, and other goods.

Each brand features a different mix of benefits and appeals to a different segment.

Product modifications appeal to different niches within certain segments.

P & G – Segments the MarketP & G – Segments the MarketCase StudyCase Study

The Payoff P&G generates revenues

in excessive of $4 billion in U.S. laundry detergent market alone.

Tide has 34% share of powder and 24% share of liquid market segments.

Combined, all P&G brands account for 75% share of powder and 55% share of liquid detergent markets.


Steps in Target Marketing

Market segmentation– Dividing a market into smaller groups of buyers

with distinct needs, characteristics, or behaviors requiring separate products or marketing mixes.

Target marketing– Evaluating each segment’s attractiveness and

selecting one or more to enter.

Market positioning– Setting the competitive positioning for the

product and creating a detailed marketing mix.


Market Segmentation

Key variables:– Geographic– Demographic– Psychographic– Behavioral

No single way to segment a market. May combine more than one variable to

better define segments.


Market Segmentation

Geographic:– World region or country– Region of country– City or metro size– Density or climate


Market Segmentation

Demographic:– Age, gender, family size, family life cycle,

income, occupation, education, race, religion, etc.

– The most popular bases for segmenting customer groups.

– Easier to measure than most other types of variables.


Market Segmentation

Age and Life-Cycle Stage:– Example: P&G has different toothpastes

for different age groups.– Avoid stereotypes in promotions.– Promote positive messages.


Market Segmentation

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.


Market Segmentation

Psychographic:– Social class– Lifestyle– Personality


Market Segmentation

Behavioral:– Occasion segmentation

• Special promotions and labels for holidays.

– (e.g., Hershey Kisses)

• Special products for special occasions.– (e.g., Kodak disposable cameras)


Market Segmentation

Behavioral:– 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)


Market Segmentation

Behavioral:– User Status

• Nonusers, ex-users, potential users, first-time users, regular users

– Usage Rate • Light, medium, heavy

– Loyalty Status • Brands, stores, companies


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.– Geodemographic segmentation is

becoming more common.


Market Segmentation

Geodemographic:– 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


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


Segmenting International Markets

Factors used:– Geographic location– Economic factors– Political and legal factors– Cultural factors

Intermarket segmentation:– Segments of consumers who have similar

needs and buying behavior even though they are located in different countries.


Requirements for Effective Segmentation

Measurable Accessible Substantial Differentiable Actionable


Evaluating Market Segments

Segment Size and Growth– Analyze current segment sales, growth rates,

and expected profitability. Segment Structural Attractiveness

– Consider competition, existence of substitute products, and the power of buyers and suppliers.

Company Objectives and Resources– Examine company skills & resources needed to

succeed in that segment.– Offer superior value and gain advantages over

competitors.


Target Marketing Strategies

Undifferentiated (mass) marketing– Ignores segmentation opportunities

Differentiated (segmented) marketing– Targets several segments and designs

separate offers for each Concentrated (niche) marketing

– Targets one or a couple small segments Micromarketing (local or individual

marketing)


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.


Choosing a Market Coverage Strategy

Factors to consider:– Company resources– Product variability– Product’s life-cycle stage– Market variability– Competitors’ marketing strategies


Socially Responsible Targeting

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.


Positioning for Competitive Advantage

Product’s position is the way the product is defined by consumers on important attributes, or as the place the product occupies in consumers’ minds relative to competing products.– Perceptual position maps can help define

a brand’s position relative to competitors.


Choosing a Positioning Strategy

Identify a set of possible competitive advantages on which to build a position.

Choose the right competitive advantages.

Select an overall positioning strategy.


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.– Achieved via differentiation.


Identifying Possible Competitive Advantages

Product differentiation Services differentiation Image differentiation People differentiation


Positioning Errors

Underpositioning:– Failing to really position the company at

all. Overpositioning:

– Giving buyers too narrow a picture of the company.

Confused Positioning:– Leaving buyers with a confused image of a

company.


Choosing Right Competitive Advantages

Important Distinctive Superior Communicable Preemptive Affordable Profitable


Overall Positioning Strategy

Full positioning of the brand is called the brand’s value proposition.

Potential value propositions include:– More for More– More for the Same– The Same for Less– Less for Much Less– More for Less


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.


Rest Stop: Reviewing the Concepts

1. Define the three steps of target marketing: market segmentation, market targeting, and market positioning.

2. List and discuss the major bases for segmenting consumer and business markets.

3. Explain how companies identify attractive market segments and choose a target marketing strategy.

4. Discuss how companies position their products for maximum competitive advantage in the marketplace.

chapter six segmentation, targeting, and positioning: building the right relationships with the...

Documents

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