7-1
PRINCIPLES OF MARKETING
Eighth Edition
Philip Kotler and Gary Armstrong
Chapter 7
Market Segmentation,
Targeting, and Positioning
for Competitive Advantage
 Copyright 1999 Prentice Hall
Steps in Segmentation,
Targeting, and Positioning
6. Develop Marketing
Mix for Each Target Segment
5. Develop Positioning
for Each Target Segment
4. Select Target
Segment(s)
7-2
Market
Positioning
Market
Targeting
3. Develop Measures
of Segment Attractiveness
2. Develop Profiles
of Resulting Segments
1. Identify Bases
for Segmenting the Market
Market Segmentation
 Copyright 1999 Prentice Hall
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)
Micromarketing
Products to suit the tastes of individuals or locations
(complete segmentation)
 Copyright 1999 Prentice Hall
7-3
Step 1. Market Segmentation
Bases for Segmenting Consumer Markets
Geographic
Nations, states,
regions or cities
Demographic
Age, gender,
family size and
life cycle,
or
income
Psychographic
Social class, lifestyle,
or personality
Behavioral
Occasions, benefits,
uses, or responses
 Copyright 1999 Prentice Hall
7-4
Using Multiple Segmentation
Bases: Geodemographics
 Copyright 1999 Prentice Hall
7-5
Step 1. Market Segmentation
7-6
Bases for Segmenting Business Markets
Personal
Characteristics
Situational
Factors
Demographics
Bases
for Segmenting
Business
Markets
Purchasing
Approaches
 Copyright 1999 Prentice Hall
Operating
Characteristics
Step 1. Market Segmentation
7-7
Bases for Segmenting International Markets
Industrial Markets
Geographic
Economic
Cultural
 Copyright 1999 Prentice Hall
Political/
Legal
Intermarket
Step 1. Market Segmentation
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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.
 Copyright 1999 Prentice Hall
Step 2. Market Targeting
7-9
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.
 Copyright 1999 Prentice Hall
Step 2. Market Targeting
7-10
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
Segment 1
Company
Marketing
Mix
Segment 2
Segment 3
C. Concentrated Marketing
 Copyright 1999 Prentice Hall
Step 2. Market Targeting
7-11
Choosing a Market-Coverage Strategy
Company
Resources
Product
Variability
Product’s Stage
in the Product Life Cycle
Market
Variability
Competitors’
Marketing Strategies
 Copyright 1999 Prentice Hall
Step 3. Positioning for Competitive
Advantage
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• Product’s Position - the place the product
occupies in consumers’ minds relative to
competing products; i.e. Volvo positions
on “safety”.
• Marketers must:
– Plan positions to give products the greatest advantage
– Develop marketing mixes to create planned positions
 Copyright 1999 Prentice Hall
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
 Copyright 1999 Prentice Hall
Usage
Occasions
7-13
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.
 Copyright 1999 Prentice Hall
7-14
Developing Competitive
Differentiation
Product
7-15
Service
Areas for Competitive
Differentiation
Personnel
Image
 Copyright 1999 Prentice Hall
Selecting the Right Competitive
Advantages
7-16
Important
Profitable
Criteria
for
Determining
Which
Differences
to
Promote
Affordable
Preemptive
 Copyright 1999 Prentice Hall
Distinctive
Superior
Communicable